The Economic Security Bureau cannot independently establish new taxation rules - lawyer
Kyiv • UNN
The Economic Security Bureau interprets aircraft leasing as royalties and has opened cases against airlines. The lawyer emphasized: the final decision on taxation is made by the court.
The Bureau of Economic Security may formulate its own legal position on the taxation of particular transactions and use it in criminal proceedings. However, such a position does not change the legislation, create new tax obligations, or constitute a binding consideration for the court. Lawyer Rostyslav Kravets expressed this view in a comment to UNN.
The BES interprets aircraft leasing as royalties
As UNN previously reported, in 2024 the Bureau of Economic Security began interpreting transactions involving the leasing of air transport from non-residents of Ukraine as the use of equipment. According to the investigators’ version, Ukrainian air carriers were supposed to pay royalties for leasing aircraft and helicopters.
In connection with this, the BES opened criminal proceedings against at least 5 air carriers, including MAU, "Constanta Airlines," "Windrose," N3Operations, and "Skyline Express." According to UNN, another airline — "Urga" — may also figure in a similar case.
The criminal proceedings were opened despite the fact that almost all air carriers had successfully passed tax inspections, and the tax authorities’ only leasing-related objections concerned one company.
Representatives of the aviation industry insist that the problem arose because of an ambiguous interpretation of the legislation and requires the establishment of a unified state approach.
In response to a request from UNN, the Ministry of Finance reported that the taxation of aircraft leasing transactions is carried out in accordance with the Tax Code and Ukraine’s international treaties. At the same time, the Tax Code of Ukraine does not provide for the possibility of taxing aircraft leasing as royalties. Therefore, the Bureau’s approach to interpreting aircraft leasing without changing the tax legislation is described as pressure that could destroy the entire passenger and freight transportation industry. After all, according to data from the State Register of Civil Aircraft of Ukraine, 86% of the aircraft fleet of Ukrainian companies is leased.
That is why the issue of aircraft leasing was submitted for consideration by the Tax Committee of the Public Council under the Ministry of Finance. Following the first meeting, it was decided to initiate the establishment of a working group under the Ministry of Finance, which is to develop a draft generalized tax consultation on the taxation of lease payments made to non-residents.
The BES’s position is not a new provision of law
Lawyer Rostyslav Kravets explains that, as a law enforcement agency, the BES has the right to analyze the circumstances of a specific case and formulate its own legal assessment of companies’ actions. In particular, if the Bureau believes that certain transactions indicate possible tax evasion, the relevant conclusions may be used to substantiate the investigators’ position.
However, the lawyer emphasizes that it is essential to distinguish between the position of a law enforcement agency and a provision of legislation.
As a law enforcement agency, the BES cannot change the law or establish new taxation rules through its conclusions. Ultimately, it is the court that interprets the law. Therefore, the court is not obliged to agree with the legal assessment provided by the BES
He added that the Bureau’s own interpretation of the legislation may be sufficient for carrying out certain procedural actions. However, this does not mean that the law enforcement officers’ conclusions are automatically correct from a legal standpoint.
In addition, Kravets recalled that the relevant procedural documents prepared by the investigators must be approved by a prosecutor, who will subsequently represent the prosecution in court.
This issue is of particular importance in the situation involving the taxation of lease payments made by Ukrainian airlines to foreign owners of aircraft. As already mentioned, the BES interprets such payments as royalties.
According to Kravets, it is incorrect to conclude how the relevant payments should be taxed solely on the basis of the Bureau’s position. The mere fact that a law enforcement agency interprets tax legislation in a particular way does not mean that this interpretation should automatically be applied to businesses.
The final assessment is made by the court
As the lawyer explained, if the case proceeds to a substantive court hearing, the court will take into account the arguments of both parties, judicial practice, academic research, and other materials. At the same time, the conclusions of the Economic Security Bureau (ESB) do not have predetermined force for the court.
No conclusion of the ESB in itself is binding on the court and may not replace the law. It is the court that has the final say on how the relevant provision of legislation should be applied in a particular case
Thus, the ESB’s right to investigate possible tax crimes does not grant the Bureau the authority to independently create new taxation rules. If a law enforcement agency considers a particular transaction to be subject to taxation, this position must undergo review in accordance with the procedure established by law, and if the matter is considered on its merits, the court will have the final say.