Politicization of Taxation
As Tatiana Zamorska, director of the Tax and Legal Department at KPMG in Ukraine, has noted, 2009 was the year when the political component in the taxation policy pursued by the Ukrainian authorities reached its critical point. Yet, Ukrainian taxpayers would remember Government resolutions that introduced unfavorable provisions on VAT and corporate profits tax which contradicted fundamental principles of tax legislation and which were subsequently recognized as unconstitutional and void. Needless to say, major tax issues like the carrying forward of tax losses, preservation of FOREX losses and VAT refund remained unresolved and uncertain. The end of 2009 was also marked by a new law aimed at overcoming the financial crisis, which legalized the retroactive force of certain provisions of tax law as applicable to banks, and, at the same time, created a number of additional obstacles for foreign investors, especially foreign lenders, which were found by the Ukrainian business community to be discriminatory towards foreign investors.
KM Partners is a local practice that is one of the Ukrainian tax market leaders of the last few years. In 2009 its knowledgeable team successfully represented the interests of clients in disputes with tax and custom authorities whose total value exceeds UAH 2 billion. The firm’s specialists successfully worked on preparing several changes to customs legislation and participated in projects on regional and global structuring for foreign companies working in Ukraine ensuring the coverage of tax matters. Senior partner Alexander Minin enjoys a reputation of being an acknowledged expert in tax matters.
Konnov & Sozanovsky attorneys at law offer expertise across a spectrum of tax matters, and are involved in both transactional and litigation work. In 2009 represented the interests of its clients in the District Administrative Court of Kiev in a dispute with the Tax Inspectorate regarding the abolition of tax demands; assisted Zara Ukraine Ltd as well as Oriflame Cosmetics Ukraine Ltd on various day-to-day tax issues, etc. Yevgeniya Derbal and Dmitriy Isayev are highly regarded professionals in this area of practice.
Servicing Fortune 500 companies and CIS-based blue chip firms, Magisters cover tax advice for various projects across its practices: M&A, real estate, financial products, tax disputes, international tax, transfer pricing, etc. Moreover, the head of the practice, Oleh Marchenko, is highly regarded in the market and is the President of the International Fiscal Association in Ukraine.
Ernst & Young recently advised a bank with foreign capital (Top 20) on the tax implications of the sale of loans to foreign and domestic debt collection companies and also advised a Ukrainian debt collection company on tax issues related to the sale of loan portfolios from a Ukrainian bank to a factoring company. Igor Chufarov, senior manager, provides quality work. The name of partner Volodymyr Kotenko is a well-known figure in Ukrainian circles.
The tax team in the Kiev office of DLA Piper provides on-going tax advice to a number of companies, including the Ukrainian companies of Carlsberg group, Jabil Circuit, Avon, Saint Gobain Zorya, Reckitt Benckiser, OBI AG, Inditex S.A., etc. The team is heavily involved in large-scale projects, providing transactional support, advising on structuring of business efficiency from the tax perspective. The tax restructuring of business, as well as VAT and customs-related advice, was also provided by the team in 2009. Svitlana Musienko, legal director, and Yulia Logunova, senior associate, are greatly appreciated due to their frequent participation in projects.
Vasil Kisil & Partners has a strong tax team, which in 2009 advised numerous complex transactions, including tax advice to SEB AB and Swedbank on restructuring the bad loans of Ukrainian banks and taking over distressed assets; providing tax comments to City Capital Group regarding the tax implications of corporate restructuring of one of the largest real estate projects; assisted APM Ukraine regarding VAT refund restrictions with respect to closing operations in Ukraine; advised Panorama Group with respect to a number of its core real estate projects on cross-border restructuring. Denis Lysenko, partner, and Ivan Yurchenko, senior associate, continuously provide comprehensive advice on tax issues related to restructuring and cross-border transactions. Andriy Stelmashchuk, counselor, regularly represents clients in the most complicated tax litigation cases. Natalia Dotsenko-Belous, senior associate, is highly recognized as an expert on issues related to taxation of construction projects, including financing of construction.
Baker & McKenzie benefits from broad expertise in corporate structuring, transactional work, etc. The office was involved in advising a number of international clients including, inter alia, an international investment bank, hi-tech company, an international commodity trader, with respect to tax structuring of their Ukrainian business. Other tax highlights include advising Estee Lauder Ukraine and Estee Lauder AG Lachen in negotiations with the tax office of the customs value of imported products; assisting a US-owned Swiss company engaged in manufacturing and technology with respect to restoration of tax ledgers and filing of tax returns on corporate income tax (CIT) by a permanent establishment of a client in Ukraine for the last 3 years (statute of limitation), including negotiations with Ukrainian tax authorities of the reported results, etc. Partner Hennadiy Voytsitskyi and associates Yuriy Zaluskyy, Tetiana Gryn and Andriy Sydorenko are the main practitioners in Kiev.
The recent activity of CMS Cameron McKenna was rich in tax advice concerning investments, financial transactions, M&A related taxation. The firm has been involved in giving tax advice to a DYI retail chain with respect to foreign investments in the construction of a new retail outlet; consulting of a private equity company regarding taxation of extraction of natural resources conducted under joint activity agreement; advising a major financial institution on tax implications with respect to financing of a borrower whose assets are kept under tax pledge; assisting a major FMCG company on peculiarities of excise duty taxation of its products, etc. Adam Mycyk, managing partner, Andriy Buzhor, associate, are the key force of the firm’s practice.
The Kiev office of Gide Loyrette Nouel demonstrates its focus on tax structuring of investment projects in the country, general company law, existing tax regimes, VAT issues. Of recent projects it is worth mentioning advice provided to an international consortium of building contractors on the construction and operation of a new passenger terminal at Borispol international airport. The project was financed by the Japan Bank for International Cooperation. The team of lawyers also advised a world leader in building materials on the construction and operation of a cement plant in Ukraine; provided on-going tax advice related to a major international producer of cryogenic liquids and gases investment and import into Ukraine; advised a leading European seed producer on tax issues relating to the establishment of its agricultural business in Ukraine; assisted Eurocopter, a major foreign helicopter manufacturer, on a tender by the Ukrainian Ministry for the purchase of rescue helicopters and advised Renault Trucks Ukraine on the potential acquisition of one of its main trucks dealers in Ukraine, etc. Karl Hepp de Sevelinges and Bertrand Barrier are experts in such projects.
Sayenko Kharenko has developed a strong reputation as Ukrainian tax counsel for cross-border transactions, especially in capital markets, finance, M&A and restructuring. In 2009 the tax team of Sayenko Kharenko advised the EBRD on the tax issues related to providing a multimillion loan to a major Ukrainian bank; assisted Credit Suisse on tax planning for the restructuring of a loan to the State Road Service of Ukraine; supported HSBC and UBS on tax planning for the restructuring of USD 1 billion Eurobonds issued by Alfa-Bank. The firm also provided tax advice on the landmark merger of the Ukrainian Securities Depository (AUSD) and the Interregional Securities Union (MFS). Michael Kharenko, Dmytriy Korbut, partner, together with Nazar Chernyavsky, partner, were noted for conducting numerous tax projects in Ukraine.
The tax practice of Salans law firm was M&A driven. In 2009 it consists of advising CHS Inc. regarding its acquisition of an ownership interest in a grain terminal in the port of Odessa and Diebold with regard to its acquisition of a legal entity in Ukraine. Igor Davydenko, Myron Rabij and Sergiy Melnyk are all experienced in covering tax issues at Salans.
In 2009 the team at Asters, as headed by Oleksiy Didkovskiy, consulted Telenor on various tax issues related to restructuring of a shareholding in Kyivstar; supported PPG-Helios on tax law issues in connection with establishing the company’s presence in Ukraine and participation in construction and operation of the Cherkassy Automotive Plant; advised MasterCard on tax aspects of its activities in Ukraine; assisted a leading global innovative technical company on tax aspects of sale and purchase of assets located in Ukraine between foreign entities; a world leader in energy and petrochemicals industry on tax issues in connection with company’s operation in Ukraine. Vadym Samoilenko is regarded as being sound in tax practice matters.
As a member of the Big Four auditing firms, the tax and legal department of Deloitte in Ukraine is traditionally strong in tax advice. During the past year the office focused on providing tax advice to clients; performing tax reviews and tax due diligence procedures; representing the interests of clients before tax authorities and courts; ensuring tax compliance as well as providing personal tax services.
The tax practice at Arzinger is headed by partner Anna Pogrebna and 8 practitioners. In 2009 the team at Arzinger was strengthened by partner Pavlo Khodakovsky. Recent projects consisted of representing the interests of large European Beverages — producing group in a M&A deal (the issue of deducting withholding tax arose, complicated by ambiguity of Ukrainian legislation);
assisting a European luxury car producer in Ukraine — an enterprise has been prescribed to pay significant fines for allegedly violating personal income tax collection procedures. Current legislation and legal practice have been analyzed, which proved the claims of the state tax administration to be unjustified. The team was also engaged in tax disputes and represented the interests of one of the largest Ukrainian banks in a dispute with the tax authorities.
PricewaterhouseCoopers is known in the market for many years experience in advising foreign and Ukrainian business in various areas of taxation, domestically and international issues. In the previous year lawyers gave legal and tax support to a foreign investor in acquiring a retail unsecured portfolio from a Ukrainian bank.
Gvozdiy & Oberkovych’s tax practice, as chaired by managing partner Valentyn Gvozdiy, enjoys a strong reputation. The firm actively assists clients in resolving tax disputes with the state and regional authorities. Recent cases include representation of a large Ukrainian company in a lawsuit on improper calculation of VAT and related penalties on general amount of USD 2 million; representing a leading Ukrainian company in a USD 1.5 million dispute on application of financial sanctions by the Ukrainian Tax Authorities, assisting a Ukrainian construction company on USD 1.2 million dispute on validity of application of sanctions by the Ukrainian Tax Authorities.
Kiev-based Noerr Stiefenhofer Lutz advised on a broad range of tax issues, including tax review and tax due diligence. The past year was notable for tax advice on the merger of two Ukrainian subsidiaries of a large German gas production company; tax due diligence conducted of a Ukrainian scrap metal processing company for a large international corporation; advice on the spin-off of a foreign representative office in Ukraine, etc.
One of the core activities of INTEGRITES is retaining services in the tax sphere. The firm has developed about 50 schemes of companies’ finance planning in order to minimize the tax burden. Another function is to analyze financial and transactional documents of different companies in order to make them applicable to current tax and currency legislation. One of the biggest deals of 2009 saw the firm’s experts involved in a huge Norwegian investment project in Odessa. Natalia Tomashevska and Oleksandr Rudakov successfully run these types of projects in the firm.
In 2009 the experienced team of ILF represented the interests of Ukrgazdobycha Company in the Higher Administrative Court of Ukraine in a dispute with the State Tax Inspectorate in respect of recognizing invalid decisions on charging taxes and penalties of UAH 59 million. Oleksiy Kharytonov and Sergiy Silchenko are knowledgeable tax experts.
The range of the tax practice of Legal Alliance Company covers administrative disputes with regard to an agricultural enterprise and the State Tax Inspectorate in Simferopol on invalidation of tax notices-resolutions for the sum of USD 3.1 million; representation of a private company in a case on invalidation of tax notices-resolutions; appeal against the resolution of the State Tax Administration on application of a penalty against an enterprise, etc. Dmytro Aleshko, Anatoly Menshikov and Eugene Scheglov are all known as highly competent specialists in this area of practice.
The legal team at Chadbourne & Parke advised one of the world’s largest selling companies in Ukraine on various tax matters. Furthermore, the firm’s experts continue to advise Wizz Air Ukraine on various tax issues related to structuring the company’s activity in Ukraine as well as day-to-day matters. Anna Iakubenko represents the corresponding practice in Kiev.
Ihor Martsyn, partner, and Olga Galaka, senior associate, at Volkov Koziakov & Partners, were recently involved in advising Kiy Avia in their litigation against tax authorities.
Tax advice in the Kiev office of KPMG enjoys a good reputation in the market and the clientele is always rich in solid international and local clients.
Odessa-based law firm ANK is a strong performer in tax disputes. Recent highlights include advising OJSC Odessagas vs. Odessa State Tax Inspectorate in the matter of the tax notice-decisions invalidation in connection with the reduction of gross diversion on profit tax and tax credit; supporting Yug-Gaz Ltd vs. the State Tax Inspectorate in Illichevsk in the matter of tax notice-decisions invalidation in connection with the reduction of gross diversion on profit tax; representing HPC-Ukraina subsidiary of HPC Hamburg Port Consulting GmbH vs. Odessa State Tax Inspectorate in a matter of tax notice-decisions invalidation as to reducing the sum of VAT to be compensated from the budget. Alexander Kifak, Andrey Selyutin, Elena Pushchenskaya, Sergey Krasutskiy all offer professional consultancy in tax related matters.
In 2009 Pavlenko & Poberezhnyuk law group provided legal support to the American Holtec International in structuring internal financial flows as well as taxation of its activity on the territory of Ukraine. Holtec International implements engineering and construction of the second spent fuel store at the Chornobyl Nuclear Power Plant. Larysa Poberezhnyuk and Dmytro Sushko are the main specialists who handle tax issues.
In 2009 the lawyers of Andriy Kravets & Partners advised Euroventures Ukraine, BAN CJSC, one of the leading Ukrainian producers of non-alcoholic beverages owned by Coca-Cola Corporation, and Estron Corporation Limited on taxation as part of corporate law issues. The firm’s experts recently represented TransBulkTerminal LLC in several disputes on contesting tax notifications by the State Tax Administration of Ukraine regarding tax payments for approximately USD 150,000. Vladyslav Lyaskovskiy is mentioned as the firm’s prominent specialist in this area.
During the outgoing year lawyers of Paritet Law Firm regularly counseled their clients on a wide range of tax cases.
This included advising Bayer Healthcare and Merck & Co on tax, social contribution funds and other requirements of Ukrainian legislation for foreign or domestic legal entities which hire individuals under civil law or commercial contracts; representing Ukrainian state enterprise on servicing of air transport in a tax dispute regarding UAH 50 million; assisting Abroil Holding B.V. on tax and customs procedures for importing oil as well as trading in Ukraine. Taras Koval, Maksym Sysoiev and Oleksandra Hlozman are engaged in the practice.
Voropayev & Partners tax services include providing corporate and personal tax advice in Ukraine, representing clients in tax audits and inspections, participation in disputes with tax authorities, tax litigation, challenge of tax decisions, obtaining tax rulings, etc. Sergey Kurilko and Natalia Muktan are experienced.
ENGARDE strategically advises clients on all aspects of tax law. Recent developments include representation of Kalita agricultural plant before the High Administrative Court in a dispute against the State Tax Administration of Ukraine regarding collecting tax to the sum of USD 4 million, and assisting one of the largest international energy companies in negotiations with the State Tax Administration of Ukraine regarding a USD 2 million tax collection matter. Andriy Vyshevsky is noted as an experienced tax advisor at the firm.
Legal Consulting Center provided tax advice in 2009 to Polskie Gornictwo Naftowe ³ Gazownictwo SA; CJSC Germanos Telekom Ukraine on questions of taxation of separate sub-divisions and supported the representative office Veyr Mineralz Europe of Limited in tax matters, etc. The firm’s successful work is carried under the supervision of partner Arthur Nonko.
The tax team of Alexandrov & Partners was engaged in consulting and developing tax mechanisms in 2009 with regard to the purchase of corporate rights of enterprises and conducting mergers of agricultural enterprises to the total value of UAH 50 million. Olena Chernova, Lyudmyla Skyba and Olexandr Bondar are considered to be the firm’s main experts.
The practice of Jurvneshservice law firm is continually rich in tax litigation. Tax litigation on behalf of a taxpayer, Kryukov railway car building works, was notable for 2009 and partner Anna Tsirat is the main practitioner recognized by peers.
Ilyashev & Partners’ experienced team of lawyers recently represented the Antonov Design Bureau in a dispute with the Tax Administration of Ukraine over USD 5 million. Roman Marchenko, senior partner, together with Maksim Kopeychykov, partner, are responsible for this matter.
In 2009 KPD Consulting law firm gave legal advice to KyivEnergoHolding on different tax issues and supported TOV Universal Star Co. (1849 Group) and Unicredit Austria Creditanstalt AG. Mykola Dolenko, partner, handled the firm’s related projects.
Yuri Sivovna and Ivanna Romanets, from Pravochin law firm, provided legal support to Liftec in a dispute with the Regional Customs Administration of Kiev.
Jurimex law firm provided comprehensive tax assistance to a large international distribution network, the biggest manufacturer of terminal equipment for the lottery business, etc. Danylo Getmantcev and Svetlana Yazykova represent the corresponding practice of the firm.
One of the core areas of the tax practice at Jurline is litigation with the tax authorities. Legal assistance for enterprises of the alcohol industry in disputes with tax authorities must be mentioned. Alexey Inozemtsev was named in this regard.
Amparo Consulting Group became a visible player in tax disputes involving its clients and regional Ukrainian tax authorities.