Draft Law of Ukraine

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

The draft suggests providing a legislative definition to the term "the place of selling goods" in the Law of Ukraine "On Value Added Tax". The draft says that the place of selling goods is the place of actual location of goods at the moment of their sale, as well as the place where goods are located at the moment of beginning their transportation or transfer and the place, where equipment is assembled or installed.

The draft envisages exempting from taxation transactions on free transfer of property, where subjects of transferring such property are exclusively state and communal enterprises, institutions and organizations. The current wording of the Law of Ukraine "On Value Added Tax" provides such exemption for transactions on free transfer into state or communal ownership of objects of all forms of ownership, which are on the balance of one taxpayer and are transferred to the balance of another taxpayer.

The draft envisages setting forth that the basis for taxing transactions on sale of goods (works, services) determined at free or regulated prices (tariffs) shall not include excise duty, import duty, other general state taxes and duties (mandatory payments).

For goods imported (transferred) to Ukraine's customs territory by a taxpayer, the basis for taxation is to be determined not through the agreement (contract) value of goods, which is stipulated by the current wording of the Law of Ukraine "On Value Added Tax", but the customs value of goods, mentioned in the import customs declaration.

The draft, if approved, will permit increasing volumes of imports to Ukraine's customs territory.