Certain amendments were made from 01.01.15 to the Tax Code of Ukraine of 02.12.2010, № 2755-VI (hereinafter - TCU) by the Law of Ukraine “On Amendments to the Tax Code of Ukraine and Certain Legislative acts of Ukraine on tax reform” of 28.12.2014, № 71-VIII (hereinafter - the Law № 71). However, not all the amendments made by the Law came into force since 01.01.15. Some of them became effective on 01.07.2015.
Para.198.4 of the TCU is no longer in force since 1 July 2015, paras. 198.3 and 199.1 of the TCU have also been amended.
Such corrective amendments have led to the fact that it is not prohibited now to include into the tax credit the VAT amounts paid in the case of purchase (production) of goods / services and noncurrent assets, which are intended for their use in transactions that are not the subject to tax or exempted from tax, or they are not in economic activity of enterprise. Therefore, such VAT should be included in the tax credit (hereinafter - TC) to the full.
Also, since 01.07.15 there is no clause in para.198.3 of the TCU about the use of purchase in taxable transactions within the economic activity to receive the right on forming of TC on VAT. Para.198.4 of the TCU, which prohibited formation of a tax credit from purchases for preferential activity, is not effective as of the mentioned date. Now, all input tax, confirmed by tax invoices (hereinafter - TI) from the Unified Register of tax invoice (hereinafter - URTI), could be included in tax credit.
This forming procedure of VAT credit tax related to particularity of functioning of the electronic administration system. As the supplier registers all the TIs in URTI, the figure of ΣWay-bill Received in formula from para.2001.3 of the TCU takes into account all the VAT but not only that one, which could get to the TI (under the old rules).
But not everything is so nice and easy.
For example, if purchased and/or manufactured products/ services, noncurrent assets are partially used in taxable transactions and partly - no, the payer is obliged to accrue the tax liabilities, also to prepare and register TI in URTI on share of paid (accrued) tax when their purchase or production, which corresponds to the use percentage of goods / services, noncurrent assets in tax-free transactions (para. 199.1 of the TCU).
The similar situation is with products / services, noncurrent assets, which are intended for use (come into use) in preferential or in not economic activity of the payer. Thus, under the requirements of para.198.5 of the TCU, the payer is obliged to accrue the tax liabilities by reference to the tax base determined in accordance with paragraph 189.1 of the TCU, and also TI should be prepared not later than the last day of the reporting (tax) period and should be registered in URTI in a timely manner under those products / services, noncurrent assets, during the acquisition or production of which, the tax amounts have been included in the tax credit, in case if such goods / services, noncurrent assets intended for their use / come into use:
a) in transactions, which are not the subject to tax in accordance with Art. 196 of the TCU (except transactions provided for by sub-s.196.1.7 of the TCU);
b) in transactions exempted from tax according to Art.197, subsection 2 of sec. XX of the TCU, international treaties (agreements) (except the transactions provided for by sub-s.197.1.28 of the TCU);
c) in transactions carried out by the taxpayer within the taxpayer’s balance, including transfer for non-productive use, transfer of production noncurrent assets in part of nonproductive noncurrent assets;
d) in transactions that are not economic activities of the taxpayer.
If such products / services, noncurrent assets continue to be used in taxable transactions within the economic activities, including in case of transferring of production noncurrent assets in part of nonproductive noncurrent assets, the taxpayer can reduce the amount of tax liabilities that were accrued under this paragraph, based on the adjustment calculation to the tax invoice, registered in URTI (but not as it was earlier - accounting statement).
In order to apply this paragraph, the tax liabilities are determined by goods / services, non-current assets:
1) purchased for use in non-taxable transactions - on the date of their acquisition;
2) purchased for use in taxable transactions that are started to be used in non-taxable transactions, - on the start date of their actual use determined in the primary documents prepared in accordance with the Law of Ukraine “On Accounting and Financial Statements in Ukraine” of 16.07.1999, № 996-XIV.
