Draft Law of Ukraine

"On Amendment of Article 5 of the Law of Ukraine "On Value Added Tax"

The draft envisages exempting from VAT payments transactions:

• on transferring into state ownership equipment purchased at the expense of credits attracted by the state or under state guarantees;
• transactions on further transfer of this equipment into financial leasing.

When producers transfer equipment into state ownership, they accumulate arrears on VAT payments.

According to the current system of VAT taxation, producers of agricultural equipment gain tax liabilities when transferring equipment into state ownership, while the National Joint Stock Company Ukragroleasing gains the right to tax credit when accepting this equipment.

Further on, the National JSC Ukragroleasing gains tax liabilities when transferring the equipment into financial leasing, while lessees gain the right to tax credit.

Thus, the draft, if approved, will create additional privileges for VAT taxation of equipment, which will be purchased and then transferred into financial leasing.