In June 2020, our team was approached by foreign investors regarding the protection of the enterprise and its managers from illegal criminal prosecution within the framework of criminal proceedings No. 42020060000000XXXX, initiated on 06.05.2020 on the grounds of a criminal offense provided for in Part 5 of Article 191, Part 3 of Article 212 of the Criminal Code of Ukraine.
According to the version of the investigation, the Office of Strategic Investigations in the Zhytomyr region of the Department of Strategic Investigations of the National Police of Ukraine allegedly established that during 2019-2020, the officials of the client (PrJSC), acting deliberately, abusing their official position, appropriated budget funds in particularly large amounts during formation of a tax credit from the value added tax, by overstating costs and carrying out non-commodity financial and economic transactions regarding the purchase of goods from enterprises with signs of “riskiness”.
In addition, the client was charged that the officials of PrJSC, by conducting financial and economic relations with business entities with signs of “riskiness”, evaded payment of value added tax and income tax for the years 2019-2020 in the amounts , which are more than seven thousand times higher than the tax-free minimum income of citizens established by law.
The owners of the enterprise (foreign investors) categorically objected to the accusations against the enterprise and its top management.
At the initial stage, the investigation did not take into account the obvious evidence that there was no crime in the actions of the management of PrJSC and continued to put pressure on the company and its foreign investors: more than a hundred interrogations of the company’s employees and searches of dozens of contractors were conducted.
Building a defense strategy, our team argued that the officials of PrJSC did not commit violations of Article 198.1, Article 198.3. 198, item 200.1 of Art. 200 of the Tax Code of Ukraine. I draw your attention to the fact that the supervisory body repeatedly inspected the activities of PrJSC during 2018-2020. In particular, the company’s tax declarations regarding the payment of value-added tax, as well as primary documents confirming the reality of business operations and the formation of a tax credit, were checked. We drew the investigation’s attention to the fact that the client did not receive any tax notices-decisions from the supervisory authority regarding the establishment of the fact that the budget compensation was overstated. In addition, it is clear from the above provisions of the law that it is impossible to reimburse VAT amounts without the appropriate approval by the controlling body of the declared amount of budgetary reimbursement.
Additionally, our team used other mechanisms to protect the client: appeals to the Business Ombudsman Council, mass media, the Embassy of the Greek Republic in Ukraine, to the relevant Committees of the Verkhovna Rada of Ukraine to draw attention to the facts of pressure on business.
Our appeals were supported by numerous conclusions of court experts and international auditing companies, which confirmed the fact that the client’s actions did not violate the tax legislation of Ukraine.
Almost two years of active protection of the client’s interests gave a positive result.
We received a response from the investigator to our next lawyer’s request that due to the lack of sufficient evidence to declare the person a suspect and to prevent the violation of reasonable investigation deadlines, on 21.01.2022 the SU GU NP in Zhytomyr Region decided to close the criminal proceedings.
P.s. A week later, we received a letter of thanks from the Greek owners of Ukrainian businesses with a quote from the poem “Caucasus”: “Fight – you will win, God will help you! For you is the truth, for you is the glory. And the will is holy!”.