Wind up of distribution company in Ukraine
SCHNEIDER GROUP audited the company's accounting records to identify risks of potential penalties that could arise in a tax winding-up audit in order to effectively wind up a distribution company in Ukraine. We prepared recommendations for fixing accounting deficiencies and preparation of correct transfer pricing reports and documentation.
Customer
The challenge
This European leader in eco-friendly and energy-efficient construction materials planned to close its Ukrainian distribution company with a two-year timeframe. Tax authorities in Ukraine would almost certainly have conducted an investigation into the process. The tax authorities' claims were estimated at €135,000 in an early audit. The situation worsened when the company's top manager in Ukraine unexpectedly resigned.
The solution
SCHNEIDER GROUP took charge of all of the company's winding-up preparations. Existing contracts were terminated, personnel were laid off, assets were sold, and other duties were completed.
At first, SCHNEIDER GROUP offered the customer an interim administration solution for the company. This ensured the company's continued functioning in conformity with Ukrainian legislation, as well as real-time oversight of corporate processes. We identified material accounting flaws during the interim administration, which could have resulted in fines from an imminent liquidation tax audit.
In addition, we discovered a material breach of Ukrainian transfer pricing legislation. We advised the customer to make necessary revisions to their financial records and prepare the relevant transfer price reports and documentation to address the matter. By streamlining the customer’s accounting system, we were able to reduce their tax audit fines.
Our specialists determined that the tax authorities' original claims were unjustified and the amount of tax liens was overstated despite certain bookkeeping mistakes over a three-year period. We questioned the audit report and requested a re-audit to prove our customer's position due to our legal team's tax claims. Our accounting professionals sought to correct accounting mistakes and collect primary documents to support the customer's case.
The result
An additional winding-up audit reduced the total amount of claims made by the Ukrainian tax authorities by around 90% thanks to SCHNEIDER GROUP’s legal and accounting divisions efficiently combining their efforts. This saved the customer a lot of time and money. The winding-up of the customer's distribution company was completed without incident.
Since 2006 SCHNEIDER GROUP has been supporting international companies expanding to Ukraine. Our portfolio includes a full scope of services: from market analysis and partner search to complete accounting outsourcing, legal and tax consulting, and interim management services. We take over all non-core business functions so that our clients can focus on developing their business. We help our clients establishing subsidiaries in Ukraine compliant with local legislative requirements and transparent for international management. Our experts offer advice on best practices to optimise processes, reduce risks and minimise costs.