For value added tax payers (hereinafter – VAT), who during the year distributed the input VAT according to the established in Art. 199 of the Tax Code of Ukraine (hereinafter – the Tax Code) rules, it's time to sum up and conduct an annual recalculation of VAT. What are the features of the recalculation in 2021 – below.
Terms
The annual recalculation of VAT is carried out by those payers who in the current year at the same time:
- carried out transactions subject to VAT at rates of 0, 7, 14 and 20%, as well as not subject to VAT (those that are not subject to taxation or exempt from VAT);
- used goods (services) purchased or made of VAT or non-current assets partly in taxable transactions and partly in non-taxable transactions.
In 2021, no innovations were made in the procedure of annual VAT recalculation. However, the forms of the tax invoice and the calculation of adjustments to it, as well as the VAT return and its annexes have undergone certain changes. In this regard, the annual recalculation of VAT is carried out in Annex 6 (and not in Annex 7, as last year), and its result is reflected in new lines 4.1.1 (at a rate of 20%), 4.2.1 (at a rate of 7%) , 4.3.1 (at a rate of 14%) of VAT returns for December.
VAT distribution mechanism over the year
The mechanism of proportional attribution of VAT to the tax credit established by Art. 199 of the Tax Code, provides for several stages of reflection of transactions in tax accounting.
Initially, the entire amount of input VAT on the basis of a tax invoice, issued without errors in the mandatory details and registered in the Unified Register of Tax Invoices (hereinafter – URTI), the VAT payer (like all other VAT payers) refers to the tax credit of the reporting period. Further, each time the payer purchases goods, services or non-current assets that are used in both taxable and non-taxable transactions, such a payer is obliged to accrue distribution VAT liabilities, for which a consolidated tax invoice every month is drawn up (no later than the last day) and registered in URTI.
To calculate the distribution of tax liabilities use the formula:
ПЗ = БО × Чн1 × Спдв,
where
ПЗ – the amount of accrued distribution liabilities;
БО – the tax base determined in accordance with item 189.1 of the Tax Code (for goods, services– the purchase price, for non-current assets – the book value, and in the absence of accountings for noon-current assets – their usual price);
Чн1 – the share of use of goods, services, non-currents assets in non-taxable transactions;
Спдв – VAT rate.
The indicators of БО та Спдв are known, they are taken from the incoming tax invoice for which the tax credit was formed. But Чн1 for the calculation of distribution tax liabilities is determined as follows:
- if last year the payer carried out both taxable and non-taxable transactions – as the ratio of non-taxable transactions and the total amount of transactions for the previous year;
- if last year the payer did not carry out both taxable and non-taxable transactions (including if the payer is newly created) and started such transactions this year – as the ratio of tax-free transactions and the total amount of transactions in the first month in which the payer began to carry out both transactions simultaneously.
In practice, this is the case.
If taxable and non-taxable transactions were carried out in 2020, then the ready Чн1 for 2020 is used to accrue distribution tax liabilities in the current year. This is the value of column 7 of line 1 of table 1 of Annex 7 to the VAT return for January 2021. It was used throughout the year.
If taxable and non-taxable transactions first appeared in 2021 (for example, registered as a VAT payer only this year), then the calculation of Чн1 was made in the first reporting period (month) in which such transactions were declared. It was determined on the basis of actual data on the supply of taxable and non-taxable transactions (item 199.3 of the Tax Code).
It will be recalled that starting from the reporting period from March 2021, VAT payers submit to the controlling body a VAT return and annexes to it in updated forms. Due to the abolition of Annex 5, the numbering of other Annexes has changed and since then Annex 7 has become Annex 6. Accordingly, if the first need to allocate VAT occured in March 2021 (or later), the calculation of Чн1 was already in Annex 6. To do this in Table 1 of Annex 6, filled in line 2, and Annex 6 itself was submitted together with the VAT return for the reporting period in which the first non-taxable transactions were declared. On the basis of this Чн1, distribution tax liabilities were accrued until the end of the year.
