Draft Law of Ukraine

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

The draft is an alternative to draft law N 4203.

The draft suggests suspending clauses 7.7.3 and 7.7.5 of Article 7 of the Law of Ukraine "On Value Added Tax" from November 1, 2003, until December 31, 2006. According to these clauses, the amount of negative VAT balance is to be compensated to a taxpayer from the State Budget of Ukraine within one month following the month of submitting tax return.

Apart from suspending respective clauses of the Law of Ukraine "On Value Added Tax", the draft suggests setting forth a norm, according to which a taxpayer may decrease their tax liabilities on VAT and enterprises profit tax until the whole amount of negative VAT balance is compensated in such a way during this period.

The draft, if approved, will permit increasing the volume of turnover means of enterprises at the expense of decreasing tax liabilities, which should be paid to the state. This, in its turn, will direct respective funds to expansion of enterprises, diversification of production and to other purposes.