Taxes

Goods export: VAT

A growing number of Ukrainian companies carry out export transactions. Determination of VAT rates for export transactions has a lot of subtle aspects. Let’s talk more specifically on how VAT is added to the exported goods.

According to subparagraph 195.1.1 (a) of the TCU the VAT for exported goods is zero-rated. Even if VAT is not applied to the operations with goods supply within the customary territory of Ukraine in compliance with provisions of Chapter V of TCU zero rate is applied to the export operations for such goods (p. 195.2 TCU).

It is worth mentioning that the rule of first event for determination of export tax obligations is not applicable, as advanced payment for goods, exported outside the customary territory of Ukraine, does not affect an exporter’s tax obligations (p. 187.11 TCU).

VATable objects are operations conducted by the payers of VAT imposed on goods exported outside the customary territory of Ukraine (p. 185.1 (d) TCU). The export transaction is confirmed by a customs declaration. Accordingly, the date when the tax obligations rise is determined as the date when the customs declaration that certifies crossing of Ukrainian tax border is made in compliance with the requirements of customs law (p. 187.1 (b) TCU).

Let us notice, that the date of actual crossing of the border, indicated in the notification of actual export of goods, is not always the date when the customs declaration is made. So, it is important that these two dates must not be mixed up. In order to determine the date when the VAT obligations rise, the taxmen recommend following the customs law (it is mentioned as well in ІПК SFS 414/6/99-99-15-03-02-15/ІПК of February 1, 2018).

The date when the customs declaration is made is the date when the tax obligations for exported goods rise.

Customs clearance is considered undergone when all the customs formalities, specified in the Customs Code of Ukraine (hereinafter – CCU) according to the claimed customs treatment that is approved by the authority that deals with incomes and charges through placing customs securities (including by means of information technologies), other marks on customs declaration or document which according to legislation substitutes it as well as on shipping documentation if submitted in hard copy (part 5, art. 255 CCU).

At the same time the customs declaration in hard copy is considered to be made when a customs authority official who finalizes customs clearance seals every all the pages of the customs declaration with personal numbered seal.

Electronic customs declaration is considered to be made when the customs authority official who finalizes customs clearance makes a mark by means of automized system of customs clearance that the declaration is processed and certifies such declaration with e-signature of customs official who finalized the process (i.16 of Regulation on customs declarations approved by CMU resolution 450 of May 21, 2012).

So, the date when the tax obligations including VAT rise is the date when the respective note is made on the customs declaration by the customs authority official certified by seal or e-signature. Despite the fact that VAT sum is equaled to 0, an exporter prepares a tax declaration and register it in the Unified register of tax invoices (URTI) on this date.

In addition, there is no need to prepare another tax declaration for the sum in excess of the exported goods as zero-rated VAT is also applicable in this case. (ЗІР, category 101.07).

You should remember that the VAT basis in the event of goods export can not be less than minimum laid down in i.188.1 TCU, in particular in the event of purchased goods sale – not less than the cost of the purchase, and for self-made goods – not less than their common cost. In addition, there is no need to prepare another tax declaration for the sum in excess of the exported goods as zero-rated VAT is also applicable in this case.

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