Yuliia Kryvomaz spoke at the online meeting of the UBA Committee on Tax and Customs Law
On December 20, 2022, the UBA Committee held an event on the topic: “Court practice during martial law: trends in 2022”. At the meeting, ’ Senior Of Counsel Yuliia Kryvomaz spoke on the topic “Cases on blocking/additional requirements for the registration of a VAT invoice in view of the nature of VAT as an indirect tax. Can the buyer appeal the blocking of the registration of the invoice?”.
Yuliia began the report by noting that the blocking of tax invoices’ registration is a massive problem. According to the results of the survey of the state of business in November, at least 50 % of companies faced blocking of the tax invoices. The problem is escalating with lightning speed. Besides, it is not only the seller whose tax invoices are blocked who suffers, but also the buyer, who is deprived of the right to a tax credit until the tax invoice is registered. In the end, the state receives double-paid VAT while the appeal of the blocking of the tax invoices drags on. This situation directly contradicts EU legislation and the practice of the EU Court of Justice, according to which VAT is an indirect tax and the burden of this tax cannot fall on the shoulders of businesses.
Today, in actual court practice, fundamental issues on VAT system functioning are not raised. Taxpayers actually apply to the court solely to unblock the tax invoice. However, the financial and administrative resources of business entities are spent mostly on this kind of lawsuit.
In order to solve the problem, it is suggested to transfer the disputes related to the blocking of tax invoices’ registration to a new level, based on the nature of the tax, the consequences for the buyer (since these are actually sanctions imposed in violation of the presumption of innocence), and to demand that national legislation be brought into line with EU legislation.
Even if at first the court practice will not be in the taxpayers’ favour, lobbying on this issue will help draw the attention of legislators, business associations, the international community, and investors that the local legislation of Ukraine is largely inconsistent with EU legislation and, as a result, initiate legislative changes to ensure the “Europeanness” of the VAT system in Ukraine.
Yuliia’s presentation is available by the link.