Value added tax is an indirect tax that is included in the price of goods (works, services) and is paid by the buyer, but the seller (tax agent) is responsible for its accounting and transfer to the state budget.How should be reflected transactions related to the calculation of input VAT and tax liabilities in the accounting?
VAT accounting rules
The accounting for calculations of value added tax (hereinafter - VAT) depends on how they are taxed in accordance with the Tax Code of Ukraine (hereinafter - TCU). On the basis of this, the Ministry of Finance approved its Guidelines on accounting of the value added tax, dated 01.07.1997, No. 141 (hereinafter - Guidelines No. 141). The VAT is a key document for accounting.
VAT transactions are to be reflected on the following sub-accounts:
- 641 “Payments to Taxes”,
- 643 “Tax Obligations”,
- 644 “Tax Credit”,
- 315 “Special accounts in national currency”.
Analytical accounts provide detail. For example, a sub-account 641 summarizes metrics for different taxes. Therefore, the VAT amount should be reflected in the analytical account “Settlement of value added tax” (para.1 of Guidelines No. 141). Typically, a sub-account of 6412 is used.
Electronic VAT Administration System
Sub-account 315 appeared after the introduction of the system of electronic administration of VAT. It records the funds on the electronic VAT account that the Treasury opens to the VAT payer.
Sub-account 315 is used only for the account of funds on an electronic VAT account, and not for the control of the registration amount of VAT (Instruction on the application of the plan of accounts for the accounting of assets, capital, liabilities and business transactions of enterprises and organizations, approved by the Order of the Ministry of Finance dated November 30, 1999, No. 291).
Input VAT
Tax credit is to be formed under transactions:
- acquisition or manufacture of goods and services;
- purchase of non-current assets;
- receiving taxable services from a non-resident;
- import of non-current assets into the customs territory of Ukraine under operating or financial leasing agreements;
- import of goods and/or non-current assets into the customs territory of Ukraine (para. 198.1 of TCU).
In general, the accounting of input VAT depends on which event was the first: written off funds or received goods or services (para.198.2 of TCU). The main thing in transactions for input VAT is the fact of registration of the tax invoices in the Unified Register of Tax Invoices (URTI). After all, there is no any tax credit without this. An exception exists for transactions confirmed by documents in accordance with para.201.11 of the TCU.
In order to account the VAT amounts not confirmed by the invoices registered in the URTI, it is necessary to use the analytical sub-account 6442 “Tax Credit Unconfirmed”.
In the case of import of goods, a tax credit arises on the date of payment of VAT on tax liabilities, and for service transactions by non-resident - on the date on which the taxpayer made a tax invoice, provided that it is registered in the URTI.
Tax liabilities
The seller that supplies the goods or services should accrue the VAT liabilities (para. 185.1 of TCU). Generally, the date of occurrence of tax liabilities is the first of the following dates:
- receipt of funds from the buyer/customer;
- shipment of goods (para. 187.1 of TCU).
In the case of supply of goods or services, it is advisable to focus on the lower threshold for calculating the VAT base:
- the price of the purchase of goods (services);
- the usual price of self-made goods (services);
- the residual value of non-current assets (para. 88.1 of TCU).
Sub-para. 1.3 of Guidelines No. 141 requires the recognition of VAT liabilities in the amount of the excess of the actual cost of goods, works and services sold at the actual selling price, although the TCU does not already include such a minimum tax base.
Guidelines No. 141 does not specify what expenses to write off the amount of excess of the minimum base over the contractual value. However, according to the logic of the use of expense accounts, all the additional VAT charges not related to the supply of non-current assets, it is expedient to reflect on the subaccount 949 “Other operating expenses”. It should be used the sub-account 977 “Other operating expenses” when VAT obligations under non-current assets to be additionally accrued.
When goods, services, non-current assets are acquired or manufactured, the entire amount of VAT should immediately be included in a tax credit. This should be done regardless of whether they are used in taxable transactions within the scope of economic activity or in transactions that are not subject to taxation or exempt from VAT (para. 198.3 of TCU).
However, if such an acquisition is not related to the economic activity of the payer or VAT-acquired goods, services, non-current assets are planned to be used not in economic activity or in transactions that do not tax VAT, it is obligatory to calculate conditional VAT liabilities (para. No. 198.5 of TCU).
Conditional tax liabilities are determined by the goods, services, non-current assets acquired for use in:
- non-taxable transactions - on the date of their purchase;
- taxable transactions, but started to be used in non-taxable transactions, - on the date of commencement of their actual use, as defined in the primary documents.
It is correct to include the amount of conditional liabilities immediately in the expense, if during the acquisition of goods (non-current assets) was not known about their future use in non-economic activities or non-taxable transactions. Otherwise, there will be a violation of the rules of accounting (para. 9 of Accounting Standards 9 “Stocks”; para. 8 of Accounting Standards 7 “Fixed assets”; para. 11 of Accounting Standards 8 “Intangible assets”; para.10, 11 of the Guidelines No. 141).
All “input” VAT belongs to a tax credit. If such goods, services, non-current assets were subsequently partially used in taxable transactions, in part - in non-taxable, it is necessary to calculate VAT liabilities. In addition, the share size should correspond to the share of use of such goods, services, non-current assets in non-taxable transactions.
According to the results of the year, the VAT payer recalculates the tax, under results of which additionally calculates (reduces) VAT liabilities on the basis of the adjustment calculation recorded in the URTI (para. 199.4 of TCU).
