Tax Developments In Ukraine And Russia

A number of recent tax developments in Ukraine and Russia underline the need for proper planning, documentation and execution of transactions in the light of the tax authorities' increasingly sophisticated and rigorous scrutiny of tax mitigation structures.

Ukraine guidance on tax disputes

Recent guidance issued by the Higher Administrative Court of Ukraine to subordinate courts giving guidance on the application of the Tax Codes in disputes coming before the courts stresses the importance of verifying recorded transactions, and instructs courts to focus on the substance, rather than the form of the transaction. Courts are required to satisfy themselves that the transaction actually took place as claimed and is not merely a "paper-trail". In addition the transaction must have a business purpose. In order to be deductible for tax (and for VAT to be recovered) expenses must be genuinely incurred and properly documented. This is particularly relevant with regard