The Southern Mining and Processing Plant (SMP) has found itself at the center of a high-profile financial scandal. The Supreme Court of Ukraine has ordered the company to pay taxes to the state budget, which were evaded through a scheme to transfer dividends abroad. The amount involved is more than UAH 29.8 billion.
For three years, PivdGZK paid dividends to 12 Cypriot companies, taking advantage of a preferential tax rate. However, the court found that the real beneficiaries were structures in the Netherlands. This scheme deprived the company of the right to benefits provided for by the double taxation convention.
The Supreme Court put an end to the case, ordering the plant to pay its tax liabilities. However, the debt was not repaid within the 10 days allotted by law. Since the beginning of May, it has officially been classified as tax debt, and the State Tax Service has begun the collection procedure.
The State Tax Service has already sent the enterprise a letter demanding voluntary payment, a tax claim and made a decision on the description of the property. According to the act signed by both parties, this property is registered as a tax lien. In case of non-payment of the debt, the assets will be forcibly sold to repay it.
The amount of the debt is growing — according to current legislation, a penalty of 120% of the NBU's annual discount rate is accrued on it. Today, this is approximately 1.4–1.5% per month.
Formally, the company transferred funds to Cypriot companies, using an agreement between Ukraine and Cyprus. However, the beneficiaries, as the court established, were structures in the Netherlands, which allows the transactions to be classified as tax optimization, and in essence, tax evasion.
This case is a landmark for Ukraine's fiscal system. It demonstrates that even large industrial giants will not escape responsibility for tax manipulation. If PivdGZK does not pay its debt in the near future, its assets will go under the hammer.
