If in the reporting period the cost of purchase, including value-added tax (hereinafter – VAT) exceeded the cost of sales, the negative tax may occur on the VAT declaration. How to pay off the VAT debts?
Observe rules
Negative difference between the amount of the declared VAT liabilities in the reporting period (line 9) and amount of tax debt (line 17) is reflected in line 19 of the declaration. The payer can use it:
- to pay off or reduce the VAT debt (line 20.1);
- to claim budget restitution (line 20.2);
- to its current bank account (line 20.2.1);
- as payment of liabilities or paying off tax debt from other payment made to the state budget (line 20.2.2);
- to include to the tax credit in the next reporting period (line 21).
The VAT payer reflects the decision made in the respective line of charter III of the VAT declaration and, if necessary, fill in its annexes and send soft copy to the controlling authority. Then the VAT payer waits for the controllers’ verdict which may be unpleasant. To make oneself safe from any potential adverse effects on controller’s side the payer should make certain that decision made complies with the requirements of i.200.4 of the Tax Code of Ukraine (hereinafter – TCU). its provisions restrict the VAT payers’ free choice to directly use the negative VAT. Let’s focus on them.
Pay off VAT debt
Considering the rules contained in i. 200.4 of the TCU the amount of negative VAT is, first of all, used to pay off the VAT debt (including deferred or instalment debt) that occurred during the previous reporting periods. However, such remittance may be only partial and does not exceed the amount of registration limit (∑Declar) at the time the controlling authority receives the VAT declaration.
Let us remind that ∑Declar indicator is determined according from the formula according to i.200.3 of the TCU, and its value is indicated in special field of line 19.1 of VAT declaration.
To find out the amount of the registration limit ∑Declar and indicators that form it, the e-request according to form J/F1301206 should be sent to the tax authority. The respective extract will be sent in response to the request.
So, to accrue the negative VAT to pay off the VAT debt, to indicate the amount of negative value within the registration limit in line 20.1 will suffice. In addition, the amount indicated in the special field of line 19.1 can not differ from the registration limit sum at the time the controlling authority receives the declaration.
The tax debt stands for both overdue tax liabilities and outstanding penalties and fines (subitems 14.1.39 and 14.1.175 of the TCU). Accordingly, all penalties and fines not accounted in integrated VAT payer card are accrued in line 20.1 of the declaration. Moreover, it should be remembered that the total amount of the debt can not exceed the VAT negative value indicated in line 19.
