Draft Law of Ukraine

"On Amendment of the Law of Ukraine "On Value Added Tax"

This draft envisages changes in terms for value added tax recovery and establishing additional requirements for recovery of this tax, cancellation of tax bill and determined list of privileges, introduction of restrictions for sale of goods if their prices are lower than those commonly accepted etc.

Value added tax should be recovered after 12 tax periods expire and at the condition a taxpayer does not have any tax arrears for previous periods. It should be noted that if the taxpayer has carried out no taxable sales of goods (works, services) or failed to submit declaration to a tax body the tax amounts, paid to budget, shall not be recovered.

If goods are exported tax amounts shall be recovered from the budget during 30 days from the date the estimation is filed and at the condition goods are de facto bought in the territory of Ukraine, and provided that there has been submitted written confirmation of the bank evidencing transfer of the funds made by the buyer-non-resident to the exporter’s account kept with the bank in Ukraine and proving that exporter has settled accounts with suppliers of the purchased goods.

In this connection newly created enterprises shall enjoy the term of export tax recovery equal to 90 days from the date of submission of tax paper and after tax body finishes respective tax audit. Such regime will be in force with respect to the above enterprises during the first 12 months from the date of their registration.

Taxpayers will have the right to enjoy the simplified export recovery procedure, if they export products of own output during the period not shorter than 2 years, provided that their export turnover for the previous year does not exceed 100 million UAH, if they have no tax arrears, and at the condition they have not failed to return currency proceeds.

This draft foresees division of taxpayers in those who are involved in entrepreneurial activity on regular basis, and those who are not involved in entrepreneurial activity on irregular basis. In the instance when enterprise carries out entrepreneurial activity on irregular basis such enterprise is subject to temporary registration. A temporary registered taxpayer shall have the right to tax credit only if a tax liability arises and exclusively within the limits of this tax liability.

It is proposed that in case the goods are sold per prices being more than 10 % lower than the common prices for identical goods the taxation base shall be determined proceeding from the level of common prices. Purchases at prices, which are 10 % higher than common prices, will allow to include in the taxpayer’s tax credit tax amounts which do not exceed 10 percent of common prices.