Let us consider what changes have been made to Draft No. 1210 for value added taxpayers (hereinafter – VAT). We will focus on VAT exemptions, as VAT-exempt transactions have caught it bad from legislators. Some benefits have been canceled, some – added and some – cut down.
So, what changes should you pay attention to:
More rules provided in Art. 197 of TCU are correctly rewritten
In particular:
- subitem 197.1.22 of the Tax Code of Ukraine (hereinafter – TCU), under which transaction of services (not just payments as before) of basic research, research and development projects are exempt from VAT, if such services and/or works are provided by the person who directly receives the payment from the account of the budgetary authority;
- subitem 197.18 of the TCU, according to which the imports transaction of breeding purebred animals, breeding (genetic) resources under codes according to UKT FEA 0101 10 10 00, 0102 10 10 00, 0102 10 30 00, 0103 10 00 00, 0104 10 10 00, 0511 10 00 00, 0511 99 85 10, made by entities not subject to special regime in accordance with Art. 209 of the TCU, and agricultural producers are exempted from VAT.
New benefits appear in the list of preferential transactions
The transactions which are now exempt from VAT:
- supply of goods/services in the customs territory of Ukraine, provided for the provision of humanitarian aid to Ukraine by diplomatic missions, consular offices of foreign states and representatives of international organizations in Ukraine in accordance with the provisions of the Law of Ukraine “On Humanitarian Aid” No. 1192-XIV of October 22, 1999 (item 197.2 of the TCU);
- free transfer vehicles of good heading 8702 and 8703 into the ownership and use of in accordance with UED FEA for persons with disabilities and other privileged categories of the population, determined by the legislation of Ukraine under the list approved by the Cabinet of Ministers, as well as special purpose vehicles – temporarily until December 31, 2020 (item 70, section 2, chapter XX of the TCU);
- supply of goods/services for humanitarian aid provided in Ukraine by diplomatic missions, consular offices of foreign states and representations of international organizations in Ukraine in accordance with the provisions of the Law of Ukraine “On Humanitarian Aid” (item 71, section 2, chapter XX of the TCU). In the period from January 1, 2016 to February 1, 2020, the procedure for exemption from VAT established by item 197.2 of the TCU will apply to such operations.
VAT exemptions for the export of soybeans and rapeseed have been abolished
We would like to remind you about goods heading 1201 and 1205 according to UKT FEA (former item 63, section 2, chapter XX of the CCU).
All exporters, with the exception for exporters soybean and rapeseed grown on agricultural land owned by such agricultural producers or in their permanent use or lease (sublet) or emphitheism, could benefit from this privilege.
Now, such transactions are subject to VAT at a general rate – zero rate.
VAT exemption provided for in item 64, section 2, chapter XX of the TCU, is cut down
As before, import transactions into the customs territory of Ukraine and the supply in the customs territory of Ukraine of vehicles equipped solely with electric motors (one or more) specified in subcategory 8703 90 10 10 in accordance with UKT FEA are exempted from VAT (including these produced in Ukraine) – until December 31, 2022.
However, this VAT exemption no longer applies to imports of goods listed in subcategories 8502 31 00 00, 8541 40 90 00, 8504 40 88 00 according to UKT FEA. It is about supplying electricity for renewable energy (wind).
