[Summary translation prepared by Business & Human Rights Centre]

Court orders Akhmetov’s Pivdennyi GZK to pay UAH 3.7 billion to the State budget, 23 April 23 2025

The Supreme Court ordered Pivdennyi Mining and Processing Plant (Pivdennyi GZK) to pay UAH 3.7 billion to the state budget.

This was reported by the Head of the State Tax Service, Ruslan Kravchenko.

He noted that the amount includes taxes and penalties for the improper application of tax benefits when the company paid dividends to Cypriot firms.

According to Kravchenko, during an audit the tax authorities found that over three years Pivdennyi GZK transferred dividends to 12 shareholders—residents of Cyprus. The total amount was UAH 29.8 billion. When paying dividends, a preferential tax rate of 5% was applied, and UAH 1.49 billion was paid to the budget.

The audit showed that these Cypriot companies were “technical” entities. The funds received were promptly transferred to companies resident in the Netherlands. Therefore, the Cypriot companies were not the beneficial owners of the income, and the preferential taxation was unlawful. As a result, the State Tax Service assessed additional tax liabilities of UAH 2.98 billion and penalties of UAH 0.8 billion.

Kravchenko stated that the company challenged the tax authority’s position in court. However, the Supreme Court put an end to the litigation by overturning the decisions of the courts of first and appellate instances.

Pivdennyi GZK must pay the relevant amount to the state budget within 10 days after the court decision is published. In case of non-payment, the company’s accounts will be blocked and its assets seized in the amount of the debt through court proceedings.

Updated at 18:40. The press service of Northern GZK stated that the company “acted in strict compliance with the provisions of the Tax Code and international law in force at the time of dividend payments in 2017–2019.”

“The Cypriot companies, which are shareholders of the asset, provided Pivdennyi GZK with all the necessary documents to apply the withholding tax rate on dividend repatriation. In its actions, Pivdennyi GZK relied on the official clarifications of the State Tax Service of Ukraine and judicial practice in force at that time,” the statement said.

In addition, according to Pivdennyi GZK, the administrative courts of first and appellate instances did not consider the case “on the merits, but annulled the tax notices primarily referring to the moratorium on tax audits during wartime.”

“At the same time, the Supreme Court of Ukraine changed the previously established practice regarding the moratorium on tax audits and, without properly examining the case materials, effectively assumed the powers of a court of first instance by adopting a new decision unfavorable to Pivdennyi GZK,” the company stated.