Legal attitude: Art. 17 para. 1 MAR - confidential information.
With reference to Current Report No. 3/2017, the Management Board of FITEN S.A. in restructuring (hereinafter: the Company) informs that on June 25, 2018, he was notified of the decision of the Head of the Mazowieckie Tax Office in Warsaw (hereinafter: the Chief) issued as a result of a control procedure including checking the reliability of the declared tax bases and the correctness of calculation and payment of tax on goods and services (hereinafter: VAT) for particular months from June 2013 to April 2014 (hereinafter: Decision).
It follows from the content of the Decision that at the earlier stage of trade in electricity purchased from a contractor, the VAT due on the sale of this energy was not paid. In the opinion of the Head, the Company did not exercise due diligence in the verification of the contractor, and thus, the Company had no right to reduce the tax due for input tax shown on the invoices issued by this contractor. As a result, the Chief Executive acknowledged that the Company overstated the amounts of input tax deducted in the tax declarations to be deducted by PLN 38,886,088.27.
The files of the inspection proceedings show that the Company was not the only Polish entity that traded with this contractor on the wholesale electricity market. In the Company's opinion, the allegations presented in the explanatory memorandum of the Decision are entirely unjustified, both as to the actual findings and the legal assessment.
The decision is not final and subject to appeal. Therefore, the Company intends to submit an appeal within 14 days from the Decision and take all legal steps necessary to demonstrate the absence of grounds for adopting a decision unfavorable to the Company. In the Company's opinion, the Company exercised due diligence in the verification of the contractor. The consultant of the Company and the attorney in respect of the subject tax proceedings is Ernst & Young Doradztwo Podatkowe sp. O.o. In addition, the Management Board of the Company informs that as a result of the Company's protection resulting from the ongoing rehabilitation proceedings (current report No. 8/2016), tax liability - in the case of maintaining the Decision by the second instance authority - will be subject to this proceeding, and therefore its enforceable enforcement and its possible repayment will be unacceptableit will only be able to follow the content of the arrangement.
Due to the amount of tax liability, the Company considers this information to be material.
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