On August 25th, 2016, CEELM reported that Shell Exploration & Production Ukraine Investments (IV) B.V. was represented by Vasil Kisil & Partners in a dispute over the Ukrainian tax authorities' refusal to grant over UAH 5 million as an automatic VAT refund. We reached out to Viktor Kachurenko, Legal Counsel at Shell Ukraine Exploration and Production I, LLC, for more information.
CEELM: What was the argument made by the Ukrainian tax authorities in attempting to retain the VAT refund, and on what basis did the Superior Court of Ukraine reject its reasoning?
V.K.: The tax authorities claimed that some general rules of the Tax Code of Ukraine re VAT automatic refund to investor–tax payer should overrule special rules in the Tax Code legalizing the specific automatic tax refund regime for product-sharing agreements. The Supreme Administrative Court of Ukraine found that the special legal rules on VAT refund in the Tax Code are prevailingly applicable to the case and override the general rules governing the VAT refund procedure. So, the tax authorities’ cassation appeal against the winning case was rejected by the SACU and our position was supported in full.
CEELM: Is the case concluded now, or are further appeals possible?
V.K.: The case is over at the level of the Supreme Administrative Court of Ukraine.
CEELM: What was the most challenging part for you during the whole process of the court proceedings?
V.K: The most challenging was to prioritize in the Judge’s opinion formed around the case, the requirement by law to apply the specific VAT automatic refund provisions of the Tax Code and the related tax provisions in the PSA. Fortunately, we succeeded in advocating this idea and the court supported our key standpoint in its decision.
CEELM: Why did you retain Vasil Kisil and Partners to represent you in the case?
V.K.: We cooperate with VKP during prolonged period of time and can confirm that cooperation is fruitful.
CEELM: How were you working with your external counsel? How did you divide the responsibilities?
V.K: We are working out our position in the court together with the external counsel who then plays the key representation & procedural role for Shell in the litigation.
