Value Added Tax

Taxpayer is:

1) any person who conducts business activities and records by his voluntary decision as a taxpayer in the manner prescribed by the Tax Code;

2) any person who is registered or should be registered as a taxpayer;

3) any person who imports goods to the customs territory of Ukraine in the taxable amount, and which is responsible for payment of taxes in case of movement of goods across the customs border of Ukraine according to the Customs Code of Ukraine, as well as:

• a person, who shall comply with customs regimes, which provide full or partial conditional exemption of taxation in case of violation of customs regimes established by customs legislation;

• a person who uses, even during importing goods to the customs territory of Ukraine, the tax benefit inappropriately and / or contrary to the terms or purposes of the provision in accordance with the ISU, as well as any other persons using the tax benefit that is not appointed for them;

4) a person who keeps track of the performance of the contract on joint activity without legal entity;

5) person – property manager who leads a separate tax account with the value added tax on business transactions related to the use of property received in the management contracts of property;

6) a person who conducts transactions with supply of confiscated property, finds treasure, property recognized unowned, property for which the owner was not addressed by the end of the storage period, and property by right of inheritance or other legally becomes the property of the state;

7) a person authorized to make tax items from tax arising from the supply of services by railway undertakings on their core activities, subordinate to the taxpayer in the manner prescribed by the Cabinet of Ministers of Ukraine.

The object of taxation are the following operations:

a) the supply of goods, delivery place of which is located at the customs territory of Ukraine, including the operations of transferring property rights to the collateral to the borrower (lender), the goods are transferred to a commercial loan, as well as the transfer of financial leasing for use of the lessee / tenant;

b) the supply of services, place of delivery which is located within the customs territory of Ukraine;

c) the importation of goods (services) to the customs territory of Ukraine in the customs regime of import or re-import

d) export of goods (services) in the customss regime of export or re-export;

e) for taxation, the export also equates the supply of goods (services) that are in free circulation in Ukraine, the customs regime of duty-free shop, customs warehouse or special customs zone;

f) for taxation, the import also equates the supply of equivalent goods (services) from the customs regime of duty-free shop, customs warehouse or special customs zone for further free circulation at the territory of Ukraine;

g) the supply of international transportation of passengers, baggage and cargo by rail, road, sea, river and air transport

Belonging operations to import or export must be determined by the Customs Code of Ukraine.

Base of taxation for most transactions is determined on the basis of their contract (contract) cost, but not below the usual price, subject to state taxes and fees. Usually it is considered the cost of goods (works, services) specified by parties.

The tax rate on the supply of goods (and services) and for import operations is 20 percent (from 1 January, 2014 – 17 per cent) charged on the tax base, at their contractual value (or cost of regular prices).

For the export of goods (services), if their export is confirmed by customs declaration, executed in accordance with customs legislation and supply of international transportation of passengers and baggage and cargo by rail, road, sea, river and air transport, tax rate is 0 percent.

Value added tax is not payable if the supply is not in Ukraine.

There are not objects of taxation value added tax:

• transactions involving the emission and movement of securities and transactions related with trade of securities for cash or securities;

• transfer operations of goods in storage, concession and leasing (rental) except financial leasing;

• providing with insurance, co-insurance or reinsurance;

• circulation operations of currency values ​​(including national and foreign currency);

• provision of cash collection, cash management services, attraction, accommodation and refund contracts loans, deposits, etc.;

• payments in cash wages, pensions, scholarships, subsidies, grants;

• reorganization of legal entities;

In addition, the Tax Code provides that the tax-exempt are some taxpayers and transactions (mainly humanitarian). For example:

• supply of domestic food for children and assortment for babies;

• supply of services for higher, secondary, vocational and pre-school educational institutions;

• supply of defense goods and special purpose goods for the disabled and other privileged people;

• supply of services in pensions, insurance benefits and financial aid for the population;

• supply of health care services by health care organizations;

• supply (subscription) of periodicals of printed mass media and books;

• supply of housing, except their first delivery;

• providing beneficent help;

• supply operations of services for passengers and cargo through the customs territory of Ukraine.

For the purpose of tax accounting except conventional primary documents and ledgers, taxpayers in carrying out operations with the supply of goods (services) must issue tax bills and make special tax registers: registers of received and issued tax invoices. Form and procedure for drafting such documents is regulated by the orders of STS of Ukraine.

Principles of accounting and tax depend on the type of transactions and counterparties involved in such operations.

Law determined peculiarities of taxation in moving goods across borders, certain tax rules: for tourism, taxation of services from non-residents special tax treatment activities in agriculture, forestry and fisheries activities associated with works of art, collectibles or antiques.

Payers of VAT every month give declaration and pay tax to tax authorities. To determine the amount of tax liability of VAT, it’s necessary to match the amount of tax, charged on transactions supply of goods (services), and the amount of tax, paid (credited) to purchase goods (services) to other taxpayers for taxable transactions. The positive difference is due to the budget, and negative is compensation or taken into account in determining the tax liability in a subsequent period.