Airlines passed tax audits: lawyers explain why BES criminal cases raise questions
Kyiv • UNN
The Bureau of Economic Security has opened criminal proceedings against five airlines regarding leasing operations, equating them to royalties. Lawyers consider this pressure on business, as the State Tax Service previously found no violations during audits.
Ukrainian airlines, against which the Bureau of Economic Security has opened criminal proceedings due to leasing operations with non-residents, have previously undergone inspections by the State Tax Service, the results of which found no violations in these operations. That is why the BES criminal cases raise questions about their legal basis and may indicate the use of the criminal process as a tool to pressure businesses. This opinion was expressed by lawyers interviewed by UNN.
Criminal cases against air carriers
The Bureau of Economic Security has opened a number of criminal proceedings against airlines. Investigators believe that at least five airlines, including MAU, "Avia 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 BES equates leasing payments to royalties and interprets aircraft not as vehicles but as "equipment".
This approach began to be applied by investigators after 2024, when the previous team of the State Tax Service published an article proposing to tax leasing operations involving transport from non-residents of Ukraine as royalties.
In this publication, the STS notes 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. After this, the BES began receiving analytical conclusions from STS representatives, which, according to representatives of the aviation industry, became the basis for opening criminal proceedings.
Based on these documents, law enforcement officers consider the lease of aircraft and helicopters as the use of equipment. In addition, investigators ignore existing international conventions on the avoidance of double taxation. Treaties with foreign states ratified by the Ukrainian parliament take precedence over national legislation. These conventions determine in which state and at what rate the corresponding non-resident income may be taxed. Therefore, the automatic additional assessment of 15% in Ukraine without considering the provisions of a specific convention is at least controversial.
It is worth noting that Ukrainian tax legislation regarding the taxation of leasing has not changed for decades. Moreover, according to STS data, airlines have undergone tax audits, and only one of them found a violation in leasing taxation. 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," stated 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 BES from opening criminal proceedings against at least five airlines at once. Thus, the carriers are being forced to pay an additional 15% royalties for the last seven years, i.e., retroactively.
BES questions the results of STS audits
Liudmyla Usatiuk, partner at the law firm "Bolinsky and Team", notes that before discussing a possible criminal offense, it is necessary to answer the main question: what exactly changed after these same operations had already been audited by the tax authorities.
"If the controlling authority (STS - ed.) examined the relevant operations and found no violations, then, in fact, the BES is questioning the conclusions of a specially authorized state body that is legally empowered to carry out tax control," the lawyer explained in a comment to UNN.
According to her, the very right of the BES to open criminal proceedings does not mean that such a decision can be based solely on a new interpretation of leasing operations, given that the legislation in this part has not changed, and the operations themselves were examined within the framework of tax audits.
"Undoubtedly, the BES has the right to open criminal proceedings. However, this right is not absolute. It must be based on new evidence or new factual circumstances that were not the subject of investigation during tax audits. If only the legal assessment of the same business transactions changes while the legislation remains unchanged, a legitimate question arises: what exactly became the basis for such a review after seven years?" – Usatiuk explained.
She emphasizes that investigators of the Bureau of Economic Security should not replace the tax control system.
"Law enforcement activities should not replace tax control. If the state, through a competent supervisory authority, has already conducted an audit and found no violations, then a further review of such an assessment is possible only in the presence of new, objective circumstances. Otherwise, it is not about establishing new facts, but about changing the approach to applying the same legal norms, which in itself cannot automatically indicate the commission of a criminal offense," the lawyer emphasized.
Separately, Usatiuk drew attention to the principle of legal certainty, which is one of the basic elements of the rule of law. According to the lawyer, it is important that businesses have the opportunity to rely on the consistency of state policy and the predictability of law enforcement.
"If enterprises acted in accordance with current legislation, fulfilled their tax obligations, passed documentary audits without any comments, and after seven years receive a criminal law assessment of the same transactions without changes in legislation, this calls into question the stability of legal regulation and the level of legal certainty for all participants in economic relations," Usatiuk emphasized.
The BES approach contradicts fundamental principles of law
A similar position is held by the founder of the law firm "Kasianenko and Partners" Dmytro Kasianenko. He notes that the airlines did not hide the leasing transactions, but on the contrary – declared them.
"In my opinion, the position of the airlines is quite strong, since they openly declared leasing transactions, provided contracts and documents during comprehensive audits by the State Tax Service, which found no violations. The BES cannot ignore these circumstances and turn a complex tax dispute over the interpretation of international conventions into criminal prosecution," the lawyer stated in a comment to UNN.
According to him, to hold someone liable for tax evasion, it is not enough to simply change the interpretation of the taxation of aircraft leasing transactions.
"For liability for tax evasion, a different view of the nature of payments is not enough – it is necessary to prove specific intent of officials, concealment of transactions, and actual non-receipt of funds to the budget," Kasianenko explained.
The lawyer also emphasized that applying a new approach to already audited transactions many years later contradicts fundamental principles of law.
"If the legislation has not changed for seven years, and the state previously raised no claims, applying a new fiscal interpretation retroactively looks like an attempt to place responsibility on businesses for a change in the position of the state body itself, which contradicts the principles of legal certainty, the presumption of legality of taxpayer actions, and the inadmissibility of using criminal proceedings as a means of pressure," Kasianenko pointed out.
If the practice of criminal prosecution due to a new interpretation of already audited transactions becomes the norm, not only individual businesses will be at risk, but also Ukraine's ability to preserve its civil aviation until the airspace is opened.