Unofficial translation:
The Main Department of the State Tax Service in Dnipropetrovsk region reminds that the object of VAT taxation is the operations of VAT payers for the supply of services, the place of supply of which is located in the customs territory of Ukraine, in accordance with Art. 186 of the Tax Code of Ukraine (hereinafter – TCU).
The norms are established by item “b” of item 185.1 of Art. 185 TCU.
The place of supply of services is the place of registration of the supplier, except for the operations specified in p.186.2 and p.186.3 of Art. 186 TCU (p.186.4 Article 186 TCU).
Supply of services is any transaction that is not a supply of goods, or other transaction for the transfer of rights to intellectual property rights and other intangible assets or the provision of other property rights in relation to such intellectual property rights, as well as the provision of services , consumed in the process of committing a certain action or carrying out a certain activity (paragraph 14.1.185, paragraph 14.1 of Article 14 of the TCU).
Supply of goods is any transfer of the right to dispose of goods as the owner, including the sale, exchange or gift of such goods, as well as the supply of goods by court decision (paragraph 14.1.191, paragraph 14.1 of Article 14 of the TCU).
Toll raw materials are raw materials, semi-finished products, components, energy carriers that are the property of one business entity (customer) and transferred to another business entity (manufacturer) for the production of finished products, with the subsequent transfer or return of such products or its parts to their owner or on his behalf to another person (paragraph 14.1.41, paragraph 14.1 of Article 14 of the TCU).
Since toll raw materials are the property of the customer and when it is transferred for processing to the executor, the ownership of these raw materials does not pass to the executor, the tax transfer of toll raw materials to the executor, as well as the receipt of finished products by the customer does not accrue VAT.
The Contractor charges VAT on services for the processing of toll raw materials on a general basis at the basic rate. In this case, the customer for such a transaction has the right to include the amount of VAT paid in the tax credit, provided that in the future such goods will be used in VAT-taxable transactions within its business activities.
Source gov.ua
