The results of comprehensive documentary audits by the State Tax Service should be one of the key pieces of evidence in the investigation of criminal proceedings against airlines that the Bureau of Economic Security suspects of non-payment of taxes through international aircraft leasing transactions. Ignoring the conclusions of the STS without the emergence of new evidence or new circumstances may call into question the validity of the criminal prosecution. This was stated in an exclusive comment to UNN by Ihor Kulykov, a lawyer at the law firm "Prykhodko and Partners," who specializes in criminal law.
Criminal cases against Ukrainian airlines
The Bureau of Economic Security has opened a number of criminal proceedings against airlines. Investigators believe that at least five airlines, including MAU, "Aviation Company Constanta," "Urga," N3Operations, and "Skyline," should have paid an additional 15% tax on non-resident income to the Ukrainian budget under aircraft and helicopter leasing agreements. To this end, the BEB equates leasing payments to royalties and interprets aircraft not as vehicles but as "equipment."
Investigators began applying this approach after 2024, when the previous team of the State Tax Service published an article proposing to tax leasing transactions with transport from non-residents of Ukraine as royalties. Tax officials note that from 2017 to 2023, companies paid UAH 13.1 million in income in the form of leasing to non-residents and did not pay 15% royalties in Ukraine.
The BEB then received analytical conclusions from STS representatives on five airlines, which, according to industry representatives, became the basis for opening criminal proceedings. During the investigation, investigators ignore existing international conventions on the avoidance of double taxation. Treaties with foreign states ratified by the Verkhovna Rada take precedence over national legislation. It is these conventions that determine in which state and at what rate the corresponding income of a non-resident may be taxed. Therefore, automatically charging an additional 15% in Ukraine without considering the provisions of a specific convention is at least controversial, experts emphasize.
It is worth noting that Ukrainian tax legislation regarding the taxation of leasing has not changed for decades. Moreover, according to the STS, airlines have passed tax audits, and only based on the results of one of them was a violation established during the taxation of leasing. The remaining tax audits did not reveal such violations.
"Based on the results of one audit of companies in the aviation industry, leasing payments were reclassified as royalties. Only one audit," noted Viktoriia Kasian, Deputy Director of the Transfer Pricing Department of the State Tax Service of Ukraine.
However, the absence of violations did not prevent the BEB from immediately opening criminal proceedings against at least five airlines. Carriers are being pressured to pay an additional 15% royalties for the last seven years, i.e., retroactively.
Tax audits are important evidence
"The results of comprehensive documentary audits by the STS are extremely important evidence that the pre-trial investigation body is obliged to evaluate... Ignoring such conclusions without the emergence of new evidence or new circumstances may call into question the validity of the criminal prosecution," emphasized criminal law expert Ihor Kulykov.
According to the lawyer, it is necessary to clearly distinguish between tax legal relations and criminal proceedings. Formally, the BEB is not bound by the conclusions of tax audits to the extent that they automatically preclude the opening of criminal proceedings. At the same time, the results of documentary audits are evidence that investigators are obliged to properly evaluate, he explained.
The lawyer noted that if over many years the tax service audited airlines, examined the taxation of international aircraft leasing and found no violations, this indicates that the companies acted in accordance with the official administrative practice of applying tax legislation.
He also emphasized that a different interpretation of the provisions of international treaties or norms of the Tax Code does not in itself automatically mean that the airlines' actions constitute a criminal offense.
"If the issue concerns the qualification of lease payments as royalties or as payment for the use of a vehicle, then first and foremost a tax dispute arises regarding the correct application of legal norms, rather than an obvious fact of intentional tax evasion," the lawyer stated.
Legal certainty as a component of the rule of law
Separately, Ihor Kulykov drew attention to the principle of legal certainty, which is an important part of the rule of law. If the legislation has not changed for years and the controlling authority did not raise objections to the taxation model during audits, then a change in the state's approach "retroactively" must be properly justified.
According to the lawyer, this also applies to the application of international conventions on the avoidance of double taxation. Their interpretation determines whether payments for the operational leasing of aircraft can be considered royalties. If the provisions of the conventions and expert opinions indicate the opposite, then, in his opinion, this is at least a complex legal dispute, not an obvious crime.
Proving the existence of a criminal offense is the main task of the BEB
Furthermore, Kulykov emphasized that to bring officials to criminal liability, a different view of the taxation procedure alone is insufficient.
"It is necessary to prove all elements of the criminal offense, in particular the existence of direct intent, awareness of the unlawfulness of one's actions, and the desire to evade fulfilling the tax obligation. If enterprises acted openly, reflected all transactions in accounting and tax records, passed STS audits without comments, and applied an approach that was not disputed by the state for a long time, then proving such intent will appear significantly more difficult," the lawyer noted.
Summarizing, the lawyer emphasized that the absence of claims from the STS does not deprive the BEB of the right to initiate criminal proceedings, but such conclusions are a significant piece of evidence in favor of the taxpayer and must be taken into account when assessing the legality of criminal prosecution.
"If criminal proceedings are based solely on a new interpretation of the same legal norms that have been applied uniformly for many years and have not been changed by the legislator, then legitimate questions arise regarding compliance with the principles of legal certainty, legality, and the inadmissibility of criminalizing an ordinary tax dispute," Kulykov concluded.