The mining and processing plant “Southern GOK” denies accusations from the State Tax Service of Ukraine (STS) regarding violations of tax legislation in the payment of dividends to shareholders in 2017-2019. According to company representatives, they were subjected to additional tax liabilities and fines amounting to 3.7 billion hryvnias.
This is reported by Бізнес • Медіа
Southern GOK’s Statements on the Legality of Dividend Payments
The company’s press service reported that in the relevant cases, “Southern GOK” acted in full compliance with the provisions of the Tax Code and international legal acts that were in effect during the dividend payments. In particular, the Cypriot companies that were shareholders of the enterprise provided all necessary documents for the application of the repatriation tax rate on dividends and were guided by the explanations of the tax service of Ukraine and court practices.
“The mentioned decision regarding tax disputes was canceled by administrative courts of first and appellate instances, particularly due to the moratorium on conducting tax audits during the state of war,” the company’s statement reads.
However, according to representatives of “Southern GOK”, the Supreme Court of Ukraine changed the practice of applying the moratorium, and without a detailed analysis of the case materials, issued a new decision that negatively affects the enterprise.
Business Risks Due to Unstable Tax Policy
The statement also noted that the instability of tax policy and judicial practice creates significant risks for investors and hinders the development of Ukrainian business. “Southern GOK” intends to continue protecting its rights by all legal means. In particular, following the Supreme Court’s decision, the enterprise is required to pay 3.7 billion hryvnias to the budget, of which 2.98 billion UAH is the principal payment, and 0.8 billion UAH is fines. The next step that the tax authorities consider is the unlawful application of a preferential tax rate of 5% on dividend payments to Cypriot companies, which, according to their claims, resulted in a failure to pay 1.49 billion UAH to the budget.
The head of the STS, Ruslan Kravchenko, reported that over three years, the enterprise transferred 29.8 billion UAH in dividends to Cypriot shareholders, applying a preferential tax rate. At the same time, in connection with this, the tax authorities halted VAT refunds for certain companies in the mining and metallurgical complex, which negatively impacts their working capital and creates additional difficulties in wartime, complicating the stable operation of the Ukrainian export-oriented sector.
According to GMK Center, despite military actions, the mining and metallurgical complex remains a key component of Ukraine’s economy. The sector’s contribution to Ukraine’s GDP in 2024 has risen to 7.2%, driven by an increase in steel production (+21.5%) and iron ore (+55.2%), the report states.