Business News, 07/08/2017

State Fiscal Service vs. Philip Morris Ukraine: Trial Continues

The second sitting of the Kharkiv Court of Appeal on the State Fiscal Service versus Philip Morris Ukraine lawsuit was held on August 2.

The fiscal body requires the company to pay UAH 635 million (over $24 million) additionally assessed tax obligations for alleged violation of the customs regime in 2015-2016.

Although the Ministry of Finance, Parliament Committee on Tax and Customs Policy confirmed that the company was operating in compliance with the law, and the Kharkiv customs authorized operation under such regime, the service continues to press charges.

“The customs authorized our operation under such regime. We imported raw material and exported finished good. Such raw material is not subject to internal taxation,” said corporate communications manager at Philip Morris Ukraine, Olexii Kalinichenko.

Business Ombudsman Algirdas Šemeta sent an independent inspector to monitor the trial in the Kharkiv Court of Appeal.

The local business community is backing Philip Morris. The director of European Business Association office in Kharkiv Iryna Konovalova highlights that Philip Morris is the biggest private taxpayer and one of the top investors in Ukraine. She believes that criminal investigation against tobacco company will negatively impact investment attractiveness of Ukraine; besides, the case is closely watched by other Ukrainian exporters. The European Business Association expects justice to prevail, no matter how strong is the need to collect money into the state budget.

Ukrainian League of Industrialists and Entrepreneurs is outraged by the pressure on the company. “The fact that a large international company, the world’s largest brand has come to the Ukrainian market not just to sell, but to produce goods and employ people is a big advantage for the country. Therefore, we must do everything possible to ensure that such companies come to Ukraine,” said executive director of its regional department, Eduard Naboka.

National Investment Council also hopes for a fair decision in the legal proceedings between Philip Morris Ukraine and the State Fiscal Service according to the head of the office, Yuliia Kovaliv.

Earlier, reportedly, the head of the Federal Department of Foreign Affairs of Switzerland, Didier Burkhalter raised concerns about the claim in an official letter to the President of Ukraine.

The court took a break until August 9.

Text: Anastasia Mitrofanova

Photo: PM