On January 1, 2018, the procedure for termination ofregistration of tax invoices was finally cancelled: para. 74.2 of Art. 74 of the Tax Code of Ukraine (hereinafter − TCU) was excluded. However, what waits for the tax invoices/adjustments calculations (hereinafter − TI/AC), registration of which was suspended by 01.01.2018? These and other changes relating to the value added tax (hereinafter − VAT) are in the following.
Cancelling the procedure for termination of registration of tax invoices
According to para. 571 of the sub-para. 2 of sec. XX of TCU, TI/AC, registration of which in the Unified Register of Tax Invoices (hereinafter − URTI) was suspended in accordance with para. 201.16 of TCU, should be registered on 02.01.2018, except:
- TI/AC according to which there were not submitted explanations and documents as of 01.12.2017;
- TI/AC on which the decision was made to refuse registration, and as of 01.12.2017 the procedure of appeal in administrative or judicial proceedings was not started.
TI/AC, registration of which was suspended from 01.12.2017 until the Law of Ukraine “On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine regarding the Balance of Budget Revenues in 2018” came into force on December 7, 2017, No. 2245-VIII (hereinafter − the Law No. 2245-VIII) and on which taxpayer submitted explanations and copies of documents, registered in the order in force prior to the entry into force of the said law.
Para. 7 of the Law No. 2245-VIII obliges the Cabinet of Ministers of Ukraine (hereinafter – the CMU) to determine, by March 1, 2018, the procedure for the termination of the registration of TI/AC in URTI in accordance with para. 201.16 of Art. 201 of TCU. Therefore, we look forward to new changes to the TCU from 01.03.2018.
Separate registration period of negative AC in URTI
There is more news about the VAT. As of 01.01.2018, changes made to para. 201.10 of Art. 201 of TCU, establish a separate registration period in the URTI for negative AC − 15 calendar days from the date of receipt of such AC by the receiver (buyer).
New terms do not depend on the date of making a negative AC. The value is exclusively the date of receipt of such AC by the receiver (buyer).
Compensating tax invoices
Starting from 01.01.2018, the accruing of compensating VAT liabilities will be made for goods/services, non-current assets purchased/manufactured with VAT (for goods/services, non-current assets acquired or manufactured before July 1, 2015 − in case if, during such purchasing or manufacture, the tax amount was included in the tax credit).
Before 01.01.2018, taxpayers constantly faced the question “Do I need to accrue VAT when transferring goods free of charge, if there was no right to a tax credit when acquiring such a product?”. From now on, we have a clear answer in the TCU: “If the goods were purchased without VAT, and it began to be used in non-economic activities − it is not necessary to accrue VAT and create a compensating tax invoice.
7% VAT rate
There are changes on the use of 7% VAT rate when it is about medical devices.
From 01.01.2018, this rate does not impose on transactions for the supply of medical products in accordance with the list approved by the Cabinet of Ministers of Ukraine, but on transactions for the supply of medical products included in the State Register of medical equipment and medical devices, or which meet the requirements of the relevant technical regulations, which is confirmed by a document of compliance, and is allowed for placing on the market and/or putting into operation and use in Ukraine (amendments to sub-para. “в” of para. 193.1 of TCU).
Taxation of VAT transactions for the supply of software products
From 01.01.2018, the definition of the concept of “royalty” is set out in the new wording.
In addition, the concept of “software products” expanded in para. 261 of sub-sec. 2 of sec. XX of TCU.
Also, from 01.01.2018 it is exempted from VAT, transactions with software products, fees for which is not considered royalties in accordance with paras. 2−7 of sub-para. 14.1.225 of TCU. Software products in details:
- computer programs, if the terms of use are limited to the functional purpose of such programs and their reproduction is limited to the number of copies required for such use (end-user use);
- copies of intellectual property objects, including electronic form, for use in their functional purpose for final consumption or for resale of such copy;
- things (including information carriers), in which the objects of intellectual property rights, as defined in the paragraph of the first subparagraph, are implemented or contain, for the use, possession and/or disposal of a person;
- objects of intellectual property rights, if the conditions for the transfer of rights to the object of intellectual property right grant the right to the person who obtains such rights to sell or realize the alienation in another way of intellectual property rights or to publish (to disclose) secret drawings, models, formulas, processes , intellectual property rights to information on industrial, commercial or scientific experience (know-how), except when such disclosure is mandatory in accordance with the legislation of Ukraine;
- copies of software products without the right to reproduce them, or if their reproduction is limited by end-user use.
VAT accrual when exporting of grain crops
Export transactions are temporarily exempt from VAT:
- from 01.09.2018 to 31.12.2021 − soybeans (UKT ZED (Ukrainian Commodity Coding System) − 1201);
- from 01.01.2020 to 31.12.2021 − seeds of rape plant (UKT ZED − 1205).
At present, when exports of these grains, export enterprises are entitled to a budget reimbursement of VAT. That is, the amount of VAT paid from the value of goods can be returned from the budget to the current account of the enterprise.
Starting from the above dates in case of export of such goods, exporting companies will be obliged on the basis of the requirements of para. 198.5 of Art. 198 of TCU to accrue VAT liabilities.
If a company purchased grain for use in non-taxable transactions, the VAT liabilities should be accounted for on the date of their purchase.
However, if the company purchased grain for use in taxable transactions and later begins to use them in non-taxable transactions, on the date of commencement of their actual use, defined in the primary documents drawn up in accordance with the Law of Ukraine “On Accounting and Financial Reporting in Ukraine”.
In other words, the amount of VAT is not returned from the budget, but “levelled” by accrual of VAT liabilities by the company.
