Despite the quarantine, the New Year holidays are approaching. Employers buy New Year gifts for employees' children. As you know, the sale of children's Christmas gifts are exempt from value added tax (hereinafter – VAT). Below we indicate the conditions under which it happens.
Transactions on sale by industrial and trade enterprises of children's holiday gifts, as well as tickets for New Year and Christmas events for children, purchased at the expense of the Social Insurance Fund for Temporary Disability, trade union committees of enterprises and organizations, other non-profit organizations annually from November 15 of the current year until January 15 of the following year, are exempt from VAT.
It should be noted that the amounts of tax paid by producers of children's holiday gifts for the purchase of raw materials and materials for their production are included in gross expenses but not in the tax credit.
Such a procedure for taxation is provided by Law of Ukraine “On Exemption from Taxation of Funds Directed to the New Year and Christmas Holidays for Children and the Purchase of Children's Holiday Gifts” No. 2117-III of November 30, 2000 as amended (hereinafter – Law No. 2117).
Holiday gifts for children should be understood as sets of goods that contain only confectionery and toys of domestic production and fruit, with a total value of not more than 8% of the subsistence level for able-bodied persons, established by law on January 1 of the reporting tax year.
The preamble of Law No. 2117 stipulates that this Law regulates some issues of financing activities related to the organization of New Year and Christmas holidays for children and adolescents, as an exception to the general provisions established by the Tax Code of Ukraine.
