Creation of mediation service at state tax service to allow improving administrative challenging of tax agency's decisions

Kyiv, March 13 (Interfax-Ukraine) – The creation of the mediation service at the State Tax Service of Ukraine will allow switching to the democratic and cheaper pretrial procedure for challenging decisions of the tax agency, Managing Partner of the EUCON International Legal Center Yaroslav Romanchuk has said.

"Tax disputes are a large problem for business. The Tax Code of Ukraine foresees two procedures for challenging decisions: administrative and courts. Until now, the administrative procedure has been almost non-functioning. Around 99% of claims of taxpayers were rejected or not satisfied due to the biased hearing of claims. In many countries the pretrial procedure for settling tax disputes is the most widespread one," he said at a press conference at Interfax-Ukraine on Wednesday, March 12.

He said that the absence of the administrative procedure for challenging tax disputes in practice causes the overloading of courts. The cases are heard with large delays of up to several years.

"Mediation is one of the forms of alternative hearing disputes. If taxpayers do not agree with the conclusions of check stipulated in the check act, taxpayers present their objections within five days. The objections are heard at a meeting of the mediation service in the presence of tax service divisions which checked taxpayers or their representatives," Romanchuk said.

The mediation service could satisfy the claim in full, partially or reject it. If the claim is satisfied partially or rejected, taxpayers have the right to use the court procedure to lodge their claims when they receive a tax decision note.

"What is happening today: the check is conducted, the check act is issued and the tax decision note is sent. Taxpayers have the right to challenge it using the administrative or court procedure," Romanchuk said.

As reported, the Cabinet of Ministers of Ukraine on March 1, 2014 by resolution No. 67 resumed operation of the State Tax Service and State Customs Service, abolishing the Income and Tax Ministry of Ukraine.

According to the report, the State Tax Service and the State Customs Service are central executive power agencies, operation of which is coordinated by the Cabinet of Ministers via the finance minister.

The State Tax Service is also realizing a state policy for administration of the obligatory social insurance fee.