From the “Naftogaz” required to pay VAT for the victory in arbitration over Gazprom

“Naftogaz of Ukraine” received notice of the understatement of tax liabilities to pay value added tax (VAT) to UAH 16.3 bn ($0.6 billion) in connection with the company winning a dispute at the JSC “Gazprom” in the Stockholm arbitration on the contract for the transit. About it reports “Interfax-Ukraine” with reference to the draft prospectus of Eurobonds of the NJSC.

The document notes that “Naftogaz” objected to the conclusion of a tax audit.

According to the position of the NAC, the Stockholm arbitration court awarded him $4.63 billion, of which us $3.87 billion in compensation for losses and damages, and $0,76 billion percent. According to the company, by 2016 the service the amount of transit are not subject to VAT, so the company paid for 4.75 billion such a tax only for compensation for 2016-2017, and $0.9 billion of awarded $3.87 billion However, according to the position of the State fiscal service VAT should be charged on the entire amount.

The document also States that the claim is to “Ukrtransgaz”: about 2.34 billion in liabilities for VAT and income tax and about 1.57 billion hryvnia (a total of around $0.15 billion) improperly calculated damages. However the company challenged this tax insights in court.

In February 2018 Stockholm arbitration court satisfied the claim of “Naftogaz” for compensation for undelivered “Gazprom” volumes of gas for transit. According to the results of two arbitration proceedings in Stockholm, Gazprom had to pay $2, 56 billion in favor of “Naftogaz”.

However, on 13 June, the Appeals court for the district of Svea (Sweden) has granted the request of PJSC “Gazprom” and issued the order on suspension of execution of the decision of the Stockholm arbitration, dated 28 February, in a dispute between “Gazprom” and “Naftogaz of Ukraine” in the framework of the contract for gas transit via the territory of Ukraine. In “Naftogaz”, assured that the decision is temporary, was made without hearing their arguments and promised to soon submit to the court their detailed explanations and counterarguments.

In September the court has unfrozen the decision of arbitration on the debt of “Gazprom” to “Naftogaz”.

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