Accounting for Write-Off of Intangible Assets: VAT Treatment and Compensatory Payments

• When operations are carried out to write off an intangible asset due to the inability to obtain future economic benefits from its use, the VAT payer must accrue compensatory VAT liabilities
• According to the National Accounting Standard 8, an intangible asset is a non-monetary asset that does not have a physical form and can be identified
• The object of taxation includes operations of taxpayers with goods and services located on the customs territory of Ukraine
• Goods are defined as material and intangible assets used in any operations, except for issuance and redemption operations
• Intangible assets are written off the balance sheet when there are no longer economic benefits from their use
• Taxpayers must calculate tax liabilities based on the taxable base and register them in the Unified Register of Tax Invoices
• If fixed assets are liquidated at the taxpayer’s discretion, it is considered a supply of such assets at market prices, but not lower than the balance value at the time of liquidation
• When writing off an intangible asset due to the inability to obtain future economic benefits, the taxpayer must comply with the provisions of the tax code and accrue tax liabilities.

Source: news.dtkt.ua

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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