The case concerned additional corporate income tax assessments exceeding UAH 240 million, as well as adjustments to the tax base of more than UAH 600 million.

Overview

Following a multi-year tax audit, the authorities effectively recharacterised the company’s financial results, applying their own approach to taxable profit, tax adjustments and the treatment of underlying transactions.

The dispute also raised material issues relating to statute of limitations and the lawfulness of the audit, including the company’s inclusion in the audit plan.

ArsLegem demonstrated that the assessments were based on a selective and formalistic interpretation of tax rules and failed to reflect the economic substance of the business.

The Court found no legal basis for the audit and the resulting tax assessments, and cancelled them in full.

Key takeaways

• Material exposure: the client avoided tax liabilities of over UAH 240 million and related adjustments exceeding UAH 600 million.
• Corporate income tax focus: the case addressed complex issues of financial result formation and tax adjustments.
• Procedural significance: deficiencies in audit initiation and conduct may be sufficient to invalidate tax assessments.

The client forms part of the London Regional Properties group, which owns significant commercial real estate assets in Ukraine, including Globus Shopping Mall and Podil Plaza Business Center.

“This case underscores a fundamental point: corporate income tax is not merely a mechanical exercise. Where the tax authority departs from both the law and the commercial reality, its position will not stand,” said Oleksandr Petrov, partner at ArsLegem.

ArsLegem continues to advise international investors and large corporates on complex tax disputes in Ukraine.