The Minister of Finance presents the analysis of VAT refund for the first 10 months of 2016

4/12/17

Today, Minister of Finance Oleksandr Danyliuk has presented the analysis of VAT refund for the first 10 months of 2016.

What’s it about?

Specialists of the Ministry of Finance analyzed data on the VAT refund to 100 companies in the period from January till October 2016. Among those companies were taxpayers applying for the refund of high VAT sums as well as companies selected at random.

The key task of the analysis was to examine the compliance of the VAT refund procedure with the regulations of the Tax Code.

The results of the analysis of the registers for VAT refund applications demonstrate a number of possible Tax Code violations by public servants and employees who are responsible for VAT refund.

Summary of the analysis results:

- 72 companies out of 100 had their VAT refund sum reduced without proper reasons in at least one month of the year (sum granted in the tax authority conclusion declared sum – sum shown in the tax authority’s decision). In other words, there are reasons to assume that the State Fiscal Service denied taxpayers a part of the VAT refund sum. 72 companies may have received UAH 3.2b less in VAT refund due to the illegal actions of the representatives of the State Fiscal Service.

- 50 companies out of 100 had the timeframe for the preparation of refund conclusions violated by the State Fiscal Service in at least one month. For some refund applications, the State Fiscal Service did not provide its conclusions to the State Treasury for 100 to 300 and even more days, though the legislation stipulates that the tax conclusions must be provided not later than 85 days after the day when the respective refund application was submitted.

- 72 companies out of 100 had the timeframe for the transfer of the VAT refund violated in 195 cases. The VAT refund sum shall be transferred to the taxpayer’s account within 10 working days after the latest possible date of the tax examination completion. At the same time, other companies had their VAT refund transferred on time, though they had tax conclusions issued on the same day and had applied for VAT refund later. In total, more than 34 cases were detected when some taxpayers received their VAT refund ahead of the queue, which violates the chronological sequence set by the law.

- 10 out of the above 72 companies had their VAT refund pending for 100 and more days, despite the fact that their data had already been captured in the register for approved VAT refund. In some cases, local offices of the State Fiscal Service submitted their refund conclusions to the State Treasury and VAT refund was effected within one working day after the date of the conclusion.

Such violations detected in 2016 will become impossible thanks to the implementation of the new VAT refund mechanism.

VAT refund in 2016 and in the beginning of 2017 (refund applications submitted before April 1, 2017) will be subject to a detailed special examination soon.

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