List No. 224 – List of goods (including medicines, medical products and/or medical equipment) necessary for the implementation of measures aimed at preventing the occurrence and spread, localization and elimination of outbreaks, epidemics and pandemics of the acute respiratory disease COVID -19 caused by SARS – CoV -2 coronavirus , the operations of which import into the customs territory of Ukraine and/or the operations of supply of which in the customs territory of Ukraine are exempted from taxation by value added tax and which are exempted from payment of import duty
Resolution No. 224 – Resolution No. 224 of the Cabinet of Ministers of Ukraine dated March 20, 2020 “On approval of the list of goods (including medicinal products, medical products and/or medical equipment) necessary for the implementation of measures aimed at preventing the occurrence and spread, localization and elimination of outbreaks, epidemics and pandemics of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus, operations for the import of which into the customs territory of Ukraine and/or operations for the supply of which in the customs territory of Ukraine are exempted from taxation by value added tax and which are exempted from payment of import duty” with changes and additions
Resolution No. 1260 – Resolution of the Cabinet of Ministers of Ukraine of November 9, 2022 No. 1260 “On Amendments to the List of Goods (including Medicines, Medical Devices and/or Medical Equipment) Necessary for the Implementation of Measures Aimed at Preventing the Occurrence and Spread, Localization of and elimination of outbreaks, epidemics and pandemics of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus, the import operations of which into the customs territory of Ukraine and/or the supply operations of which in the customs territory of Ukraine are exempted from taxation by value added tax and which are exempt from payment of import duty”
Resolution No. 1288 – Resolution No. 1288 of the Cabinet of Ministers of Ukraine dated November 16, 2022 “On Amendments to Certain Resolutions of the Cabinet of Ministers of Ukraine”
Resolution No. 1340 – Resolution No. 1340 of the Cabinet of Ministers of Ukraine of November 29, 2022 “On Amendments to the List of Goods (including Medicines, Medical Devices and/or Medical Equipment) Necessary for the Implementation of Measures Aimed at Preventing the Occurrence and Spread of localization and elimination of outbreaks, epidemics and pandemics of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus, the import operations of which into the customs territory of Ukraine and/or the supply operations of which into the customs territory of Ukraine are exempted from taxation by value added tax and which are exempt from payment of import duty”
Question 1. Under what conditions is the VAT exemption regime applied in the period from November 11 to 16, 2022?
The regime of exemption from VAT, established by clause 71 of subsection 2 of chapter XX of the Code for supply operations in the customs territory of Ukraine of goods included in the subsection “Other” of the section “Medical products, medical equipment and other goods necessary for the implementation of measures aimed at preventing occurrence and spread, localization and elimination of outbreaks, epidemics and pandemics of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus” List No. 224, is applied in the following order:
– from 11.11.2022 to 16.11.2022 (inclusive) operations of importation into the customs territory of Ukraine and/or operations of supply to the customs territory of Ukraine of goods included in the “Other” subsection of the section “Medical products, medical equipment and other goods that are necessary for the implementation of measures aimed at preventing the occurrence and spread, localization and liquidation of outbreaks, epidemics and pandemics of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus” List No. 224, were subject to VAT exemption provided that the requirements established in the corresponding footnote to such subsection and in Note 3 to List No. 224;
– from 17.11.2022 for the application of the VAT exemption regime established by clause 71 of sub-section 2 of chapter XX of the Code to operations of import into the customs territory of Ukraine and/or operations of supply to the customs territory of Ukraine of goods included in the “Other” subsection of the section “Medical products, medical equipment and other goods necessary for the implementation of measures aimed at preventing the occurrence and spread, localization and elimination of outbreaks, epidemics and pandemics of the acute respiratory disease COVID-19 caused by the SARS-CoV-2 coronavirus” List No. 224, separate conditions , established by Resolution No. 1260, was canceled.
In addition, from 02.12.2022, the subsection “Other” of the section “Medical products, medical equipment and other goods necessary for the implementation of measures aimed at preventing the occurrence and spread, localization and elimination of outbreaks, epidemics and pandemics of the acute respiratory disease COVID-19, caused by the SARS-CoV-2 coronavirus” List No. 224 was supplemented with new product items by Resolution No. 1340.
Question 2. Does the application of the tax benefit depend on the origin of goods included in List No. 224 by Resolutions No. 1260 and No. 1340?
No, it doesn’t depend. Whether the goods, included in List No. 224 by Resolutions No. 1260 and No. 1340, were previously imported into the customs territory of Ukraine, or purchased there – their supply is carried out with the application of the VAT exemption regime established by Clause 71 of Subsection 2 of Chapter XX of the Code.
Question 3. Does the tax relief apply to operations for the supply of goods included by Resolution No. 1260 in List No. 224, if such goods were manufactured/purchased in Ukraine or imported into the customs territory of Ukraine before November 11, 2022?
The VAT exemption regime, established by Clause 71 of Subsection 2 of Chapter XX of the Code for operations of supply in the customs territory of Ukraine of goods included in List No. 224, including by Resolutions No. 1260 and No. 1340, applies starting from the date from which there are grounds for applying the specified benefit, and regardless of the period when such goods were manufactured/purchased in the customs territory of Ukraine or imported into the customs territory of Ukraine, in particular, before the date of entry into force of Resolutions No. 1260 and No. 1288, or after such date.
Question 4. Does the tax relief apply to operations for the supply of goods, included by Resolutions No. 1260 and No. 1340 to List No. 224, if the buyer of such goods is an individual?
The regime of exemption from VAT, established by Clause 71 of Subsection 2 of Chapter XX of the Code for supply operations in the customs territory of Ukraine of goods included in List No. 224, including by Resolutions No. 1260 and No. 1340, applies regardless of which person ( physical or legal) such goods are supplied.
Question 5. What are the conditions and consequences of applying the regime of exemption from taxation to transactions for the supply of goods included in List No. 224, if the payment for the goods, their import into the customs territory of Ukraine and shipment to the buyer took place in different tax periods?
The regime of exemption from VAT taxation, defined by Clause 71 of Subsection 2 of Chapter XX of the Code, applies to those transactions for the supply of goods included in List No. 224 by Resolutions No. 1260 and No. 1340, the date of implementation of which (“the first event” is determined in accordance with Clause 187.1 Article 187 of Section V of the Code) falls on the period in which there are grounds for applying such a VAT exemption regime.
Namely, if:
full advance payment (“first event”) occurs before there are grounds for applying the VAT exemption regime, then the supply transaction is subject to VAT in the generally established manner. For the amount of such full advance payment on the date of receipt of funds, the supplier must issue a tax invoice including VAT. On the date of the occurrence of the “second event” (shipment of the goods), tax consequences in terms of VAT taxation do not arise for the payer;
partial prepayment (“first event”) takes place beforeif there are grounds for applying the regime of exemption from VAT taxation, then the supply transaction is subject to VAT taxation in the generally established manner. For the amount of such partial advance payment, on the date of receipt of funds, the supplier must issue a tax invoice including VAT. In the corresponding column of this tax invoice, the part of the quantity of goods for which partial advance payment has been received must be indicated. The actual shipment of goods during the period of validity of the regime of exemption from taxation of VAT within the limits of the received partial advance payment (“the second event”) does not cause tax consequences for the payer in terms of VAT. On the date of shipment of the goods, a tax invoice without VAT is drawn up for the unpaid part of the shipped goods in excess of the received partial advance payment;
“the first event” occurs during the period when there are grounds for applying the VAT exemption regime, then no VAT is charged on such a transaction, and the value of such goods is determined without VAT.
Question 6. If the Buyer paid an advance for the goods included by Resolution No. 1260 in List No. 224, before November 11, should the Supplier reduce the amount of VAT tax liabilities, and the Buyer – the amount of the tax credit?
Supplier’s VAT tax obligations
If the preliminary payment (“the first event”) for the goods took place before there were grounds (before the relevant changes were made to List No. 224) for the application of the VAT exemption regime established by Clause 71 of Subsection 2 of Chapter XX of the Code, then the Supplier’s operation of supplying such goods to the Buyer subject to VAT in the generally established manner.
On the date of receipt of advance payment for the goods from the Buyer, the Supplier had to calculate VAT tax liabilities and draw up a tax invoice for the Buyer with VAT and register it in the State Tax Registry within the time limits established by the Code.
The Supplier has no grounds for adjusting the amounts of VAT tax liabilities.
Buyer’s VAT tax credit
The amounts of VAT included by the Buyer in the tax credit on the basis of the tax invoice (registered in the Tax Register), which was drawn up by the Supplier on the date of receipt of advance payment for the goods from the Buyer, are not subject to adjustment.
Question 7. Are VAT tax liabilities accrued if part of the cost of the equipment is paid by November 11, 2022, and its actual supply and payment of the balance of its cost is made during the period of the tax benefit?
On the date of receipt of partial advance payment for the goods from the Buyer (“the first event”), the Supplier had to calculate the VAT tax liability and draw up a tax invoice for the Buyer with VAT and register it in the State Tax Registry within the time limits established by the Code.
On the date of actual shipment of the goods in excess of the received partial advance payment for the unpaid part of the shipped goods, VAT tax liabilities are not determined and the tax invoice is made without VAT.
Question 8. What is the procedure for adjusting the tax credit, if the import into the customs territory of Ukraine or the purchase of the goods included in List No. 224 took place before the date of the beginning of the application of the benefit, and the supply – during the period of validity of the benefit?
If the goods, which are included in List No. 224 by Resolutions No. 1260 and No. 1340, were imported into the customs territory of Ukraine by the taxpayer or purchased in the customs territory of Ukraine and upon their importation or acquisition, VAT was charged in accordance with the Code, then the taxpayer for import transactions /purchase of such goods has the right to attribute the amounts of VAT paid during such importation/purchase to the tax credit (in the presence of a duly executed customs declaration/the relevant tax invoice registered in the State Tax Administration).
At the same time, if the goods included in List No. 224 by Resolutions No. 1260 and No. 1340, which were purchased in the customs territory of Ukraine or imported into the customs territory of Ukraine by a VAT taxpayer, and are supplied without VAT in connection with the application of the VAT exemption regime to the operations of their supply, the amounts of tax credit generated in accordance with Article 198 of Chapter V of the Code are not subject to adjustment, VAT tax liabilities in accordance with Clause 198.5 of Article 198 and/or Article 199 of Chapter V of the Code are not accrued for such goods.
Question 9. What benefit code is indicated in the tax invoice drawn up for the supply of goods included in List No. 224 by Resolutions No. 1260 and No. 1340?
The code of the benefit is indicated in accordance with the Handbooks of tax benefits, which are approved by the DPS as of the date of drawing up the tax invoice (clause 16 of Order No. 1307).
As of October 1, 2022, Handbook No. 111/1 of tax benefits, which are losses of budget revenues, and Handbook No. 111/2 of other tax benefits are valid.
The directories are posted on the DPS web portal https://tax.gov.ua in the “Directories” section (subsection “Benefits directories”) at the link https://tax.gov.ua/dovidniki–reestri–perelik/dovidniki-/54005 .html .
According to Guide No. 111/2, transactions exempt from taxation in accordance with Clause 71 of Subsection 2 of Chapter XX of the Code are assigned code 14060544.
Therefore, in the tax invoice, drawn up for the operation of the supply of goods included in List No. 224 by Resolutions No. 1260 and No. 1340, in column 9 of the tabular part of the tax invoice, the benefit code 14060544 is indicated.
Additionally, DPS informs:
The draft Law of Ukraine “On Amendments to the Tax Code of Ukraine on Facilitating the Restoration of the Energy Infrastructure of Ukraine” (registration No. 8196), approved by the Verkhovna Rada of Ukraine, proposes to introduce a regime of exemption from VAT for operations involving the importation into the customs territory of Ukraine of certain types of equipment necessary for ensuring the restoration of the energy infrastructure of Ukraine, in particular, power generators.
