Tax authorities made changes in the part of VAT taxation introduced in connection with amendments to the TCU by the Law “On Amendments to the Tax Code of Ukraine and other legislative acts on the application of norms for the period of martial law”
1. Regarding the supply of defense goods.
Amendments to paragraph 32 of Subsection 2 of Section XX of the Tax Code of Ukraine (hereinafter – TCU) provide for a regime of VAT exemption for import and supply of certain goods in the customs territory of Ukraine to implement measures to ensure national security and defense.
In particular:
– the effect of the privilege specified in this paragraph extends to operations for the supply of goods for national security and defense, repulse and deterrence of armed aggression of the Russian Federation throughout Ukraine, not only in Donetsk and Luhansk regions (as during Operation Ob ‘ Joint Forces (JF);
– the term “defense products” was changed to “defense goods”, bringing the terminology (names of goods) in line with the Law of Ukraine “On Defense Procurement”. At the same time, the same changes in terminology were made to paragraph 197.23 of Article 197 of the TCU (the term “defense products” is defined by the law, which expired, which did not contribute to the effective use of the rule by taxpayers);
– the VAT exemption regime specified in this paragraph also applies to operations on import and supply in the customs territory of Ukraine of special personal protective equipment and bulletproof vests for voluntary formations of territorial communities formed in accordance with the laws of Ukraine.
2. Introduction of a 7% rate on operations on import and supply of fuel and oil products.
For the period of martial law, state of emergency in accordance with paragraph 82 of subsection 2 of Section XX of the TCU at the rate of VAT of 7% taxed transactions of import into the customs territory of Ukraine and supply in the customs territory of Ukraine (including those produced in the customs territory of Ukraine) such goods:
– gasolines of motor, heavy distillates and liquefied gas, classified according to the UKT FEA codes specified in sub-clause 215.3.4. paragraph 215.3 of Article 215 of the TCU, for which in accordance with paragraph 41 of subsection 5 of this section set the rate of excise tax in the amount of 0.00 euros per 1000 liters;
– crude oil or crude oil products obtained from bituminous rocks (minerals), classified according to UKT FEA codes 2709 00 10 00 and 2709 00 90 00.
Formation of tax credit for transactions for the purchase of goods and services, as well as for the import of goods into the customs territory of Ukraine, for their use in transactions subject to taxation at a rate of 7%, is carried out in the general order (based on VAT paid) purchase / import of such goods / services). Also, the tax credit formed in previous tax periods when purchasing goods and services, as well as when importing goods into the customs territory of Ukraine, which are used in transactions subject to VAT at a rate of 7%, is not subject to adjustment in connection with this rate VAT.
At the same time, if the taxpayer who during the reporting period carried out operations for the supply of fuel and petroleum products specified in paragraph 82 of subsection 2 of Section XX of the TCU, the results of such reporting period, the amount of tax determined in the VAT return 200 TCU, has a negative value, such an amount of tax can not be declared (neither in the current reporting period nor in subsequent reporting periods) to the budget reimbursement, including the repayment of tax debt for VAT or other tax be declared in the VAT tax return in lines 20.1, 20.2, 20.2.1 and 20.2.2), and is subject only to enrollment in the tax credit of the next reporting period (reflected only in line 20.3 of the VAT tax return).
At the same time, taxpayers who during the reporting period in which the supply of fuel and oil products specified in paragraph 82 of subsection 2 of Section XX of the TCU, also carried out operations to export outside the customs territory of Ukraine any permitted under the military regime, state of emergency, have the right to declare a negative value of the amount of VAT, determined in accordance with paragraph 200.1 of Article 200 TCU, to the budget reimbursement, including the repayment of tax debt, subject to other requirements specified by law, including actions of the legal regime of martial law, state of emergency.
3. Features of filling in VAT reports during martial law.
Clause 32 2 of subsection 2 of Section XX of the TCU for the period of martial law defines the features of the formation of the tax credit.
Thus, during the martial law regime, taxpayers for transactions for the purchase of goods / services, for which in the Unified Register of Tax Invoices (hereinafter – ERPN) suppliers have not registered tax invoices and / or calculations of adjustments to them, include in the tax credit period, the amount of VAT paid (accrued) as part of the value of purchased goods / services, on the basis of available to the taxpayer primary (settlement) documents drawn up (received) by the taxpayer for transactions for the purchase of goods / services in accordance with the Law of Ukraine “On Accounting and Financial reporting in Ukraine “.
At the same time, within 6 months after the termination or abolition of the legal regime of martial law, the payers:
- are obliged to ensure the registration in the ERPN of all tax invoices and adjustment calculations, the registration of which is postponed for the duration of the legal regime of martial law,
- the tax credit declared by payers during the latter on the basis of the primary (settlement) documents available to the payer is subject to obligatory specification (adjustment) taking into account the data of tax invoices and adjustment calculations (second paragraph of item 32 2 of subsection 2 of Section XX of TCU) .
Therefore, taking into account the fact that value added taxpayers do not have the opportunity to register tax invoices and calculations of adjustments to them in ERPN, the formation of the tax credit in the VAT tax reporting is carried out taking into account the following:
– for the reporting period February 2022 – the tax credit is formed on the basis of tax invoices registered in ERPN (which were registered in ERPN by suppliers before 24.02.2022) and available to the taxpayer primary accounting documents drawn up in accordance with the Law of Ukraine “On Accounting and financial statements in Ukraine ”(for transactions not confirmed by tax invoices / adjustment calculations registered in the ERPN) (hereinafter – the primary (settlement) document);
– for the following reporting periods during the period of martial law – the tax credit should be formed on the basis of the primary (settlement) documents available to the payer.
Amounts of VAT tax credit formed on the basis of primary (settlement) documents received from suppliers of goods / services should be reflected by VAT payers in Table 2.1. “Information on value added tax transactions subject to the basic rate and rates of 7% and 14%” of Annex 1 to the VAT tax return and at the same time, if possible, be included in the Statement of errors by the seller of goods / services indication of obligatory requisites of the tax invoice and / or violation by the seller of deadlines for registration of the tax invoice and / or calculation of adjustment (Annex 7 to the VAT tax return) in the ERPN, the submission of which has no consequences for prosecution.
At the same time, within 6 months from the termination or abolition of martial law, suppliers of goods / services are obliged to ensure registration in the ERPN of all tax invoices and calculations of adjustments to them for transactions for the supply of goods / services that were carried out during actions of the legal regime of martial law.
At the same time, buyers of such goods / services are obliged to clarify (bring into compliance) the indicators of the tax credit within the same period (6 months) taking into account the data of tax invoices registered in the ERP and calculations of adjustments to them.
4. Destruction (loss) of goods during the legal regime of martial law, state of emergency and transfer of goods to state or municipal ownership.
Starting from February 24, 2022 and during the legal regime of martial law, state of emergency are not considered used by the taxpayer in non-taxable VAT transactions, or in transactions that are not economic activities of the taxpayer, and the provisions of paragraph 198.5 of Art. 198 TCU does not apply if the goods purchased with VAT (both before the introduction of the legal regime of martial law, state of emergency, and during its validity):
– destroyed (lost) during the legal regime of martial law, state of emergency;
– transferred to state or communal ownership, including in favor of voluntary formations of territorial communities, as well as provided for the benefit of others for the needs of ensuring the defense of Ukraine during the legal regime of martial law, state of emergency *.
Therefore, in case of destruction (loss) during the legal regime of martial law, state of emergency of goods purchased with VAT, both before the introduction of the legal regime of martial law, state of emergency, and during its validity, as well as transfer to state or municipal ownership, including in favor of voluntary formations of territorial communities, and provided for the benefit of others for the needs of Ukraine’s defense tax liabilities are not accrued and the tax credit formed upon their purchase is not adjusted.
* The first – third and fifth paragraphs of paragraph 32 1 of subsection 2 of Section XX of the TCU
5. Transfer of goods (services) for the needs of defense of Ukraine, protection of public safety and interests of the state.
In cases of transfer / provision of goods and services to institutions or organizations maintained at the expense of the state budget for the needs of defense of Ukraine, protection of public safety and interests of the state, such transactions are not considered transactions for the supply of goods / services and , tax liabilities in accordance with paragraph 198.5 of Art. 198 of the TCU are not accrued (paragraphs four to five. 32 1 of Subsection 2 of Section XX of the TCU).
Such institutions and organizations include: Armed Forces of Ukraine, National Guard of Ukraine, Security Service of Ukraine, Foreign Intelligence Service of Ukraine, State Border Guard Service of Ukraine, Ministry of Internal Affairs of Ukraine, State Emergency Service of Ukraine, Department of State Protection of Ukraine, State Service for Special Communications and Protection information of Ukraine, voluntary formations of territorial communities, other formations in accordance with the laws of Ukraine, military formations, their associations, military units, subdivisions, institutions or organizations maintained at the expense of the state budget, as well as the central executive body that provides formation and implementation policy in the field of civil protection, civil protection forces and / or health care institutions of state and / or communal property,and / or structural subdivisions on health care of oblast, Kyiv and Sevastopol city state administrations.
In this case, the provisions of the fourth paragraph of paragraph 32 1 of subsection 2 of Section XX of the TCU do not apply to transactions for the supply of goods / services that are subject to VAT at a rate of 0%. In particular, operations on supply of goods for refueling or refueling of land military transport or other special contingent of the Armed Forces of Ukraine and other institutions specified by the Resolution of the Cabinet of Ministers of Ukraine of 02.03.2022 №178 “Some issues of value added tax at zero rate during the period of introduction of the martial law regime in Ukraine ”(hereinafter – Resolution №178) are taxed at a zero VAT rate.
At the same time, for transactions on transfer / provision of goods and services, which in accordance with the fourth paragraph of item 32 1 of subsection 2 of Section XX of the TCU are not considered supplies of goods / services, persons carrying out such transfer / provision and persons receiving such goods / services must be the basis of confirmation of primary accounting documents in accordance with the Law of Ukraine “On Accounting and Financial Reporting in Ukraine”.
6. Failure to take into account the goods / services supplied by taxpayers as charitable assistance in calculating the maximum amount for the purposes of registration by VAT payers.
According to sub-clause 69.12 of clause 69 of subsection 10 of section XX of the TCU, the operations provided for in sub-clause 197.1.15 of clause 197.1 of Article 197 of the TCU performed during 2022 by public associations and / or charitable organizations are not included in such public associations or charitable organizations determination of the total amount for mandatory registration by a value added tax payer in accordance with Article 181 of this Code.
In this case, sub-clause 197.1.15 of clause 197.1 of Article 197 of the TCU provides for VAT exemption for transactions on gratuitous (without any monetary, material or other types of compensation) supply of goods / services to charitable organizations established and registered in accordance with law, as well as provision of such assistance by charitable organizations to recipients (subjects) of charitable assistance in accordance with the legislation on charitable activities and charitable organizations.
Therefore, operations of public associations and / or charitable organizations on free (without any monetary, material or other types of compensation) supply of goods / services to charitable organizations established and registered in accordance with the law, as well as providing such assistance to charitable organizations ( subjects) of charitable assistance in accordance with the legislation on charitable activities and charitable organizations are not taken into account by taxpayers who carry out such operations, when calculating the total amount of transactions for the supply of goods / services to determine the need for VAT registration.
Glory to Ukraine!
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