VAT during the martial law

State Tax Service of Ukraine in connection with adoption of the Law of Ukraine № 2118 - IX “On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine on the taxation peculiarities and reporting during the martial law” by the Verkhovna Rada of Ukraine on 03.03.2022 for a period before the termination or abolition of the martial law in Ukraine informs that taxpayers are released from liability for compliance with payment terms of taxes and levies, reporting, registration of tax invoices in relevant registers (Paragraph 69.1 Sub-section 10 Section XX “Transitional Provisions” of the Tax Code of Ukraine) – TCU)).

Given that currently, under the martial law, electronic services of the State Tax Service work with certain restrictions and the value added taxpayers do not have opportunity to register tax invoices and adjustment calculations to them in the Unified Register of Tax Invoices, in the value added tax reporting must be reflected:

-- tax liabilities and tax credit formed on the basis of tax invoices registered in Unified Register of Tax Invoices (which were registered in it before 24.02.2022) and payer’s primary accounting documents available according to the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” (for operations not confirmed by tax invoices registered in Unified Register of Tax Invoices and calculation adjustments to them) (hereinafter – primary (settlement) document) for the reporting period of February 2022;

-- tax liabilities and tax credit formed on the basis of primary (settlement) documents available to payer for the following reporting periods during the martial law period.

Reflection of the tax liabilities and tax credit amounts in VAT tax declarations on the basis of tax invoices and primary documents not registered in the Unified Register of Tax Invoices

If possible, the taxpayers may reflect in Table 1.1 of Annex 1 to the VAT tax declaration information on the VAT amount included in tax liabilities for the reporting (tax) period regarding not registered tax invoices / adjustment calculations in Unified Register of Tax Invoices and regarding primary (settlement) documents on the date of submission of the VAT tax declaration.

The data shown in Table 1.1 (for tax invoices / adjustment calculations not registered in the Unified Register of Tax Invoices) will facilitate further registration of tax invoices and adjustment calculations in the Unified Register of Tax Invoices due to the indicator ∑Excess (“second registration limit” calculated according to Paragraph 200¹.9 Article 200¹ of the TCU).

Amounts of the VAT tax credit formed on the basis of data of primary (settlement) documents received from suppliers of products / services must be reflected by the VAT payers in Table 2.1 information on the value added tax operations subject to the basic rate and rates of 7% and 14%, Annex 1 to the VAT tax declaration and at the same time the buyer, if possible, includes in the application for admission of products / services by the seller errors in specifying mandatory requisites of tax invoice and / or violation by the seller of deadlines for registration of tax invoice and / or adjustment calculation to Annex 7 to the VAT declaration in the Unified Register of Tax Invoices (submission of such application has no consequences).

Submitting the VAT tax declarations, which reflect tax liabilities formed on the basis of primary (settlement) documents available to the taxpayer and tax invoices / adjustment calculations not registered in the Unified Register of Tax Invoices, the taxpayer will form the indicator ∑Excess in the SEA VAT and, accordingly, the registration limit in the SEA VAT will be reduced.

After an end of the martial law, taxpayers are obliged to ensure registration of all tax invoices and adjustment calculations in the Unified Register of Tax Invoices, registration of which is postponed for duration of the martial law.

Taking into account provisions of Paragraph 200 ¹.9 Article 200 ¹ of the TCU, the taxpayers will be able to register tax invoices / adjustment calculations in the Unified Register of Tax Invoices (even with a negative value of registration limit determined according to paragraph 200 ¹.3 of Article 200 ¹ of the TCU), in particular, subject to payment of accrued tax liabilities in the tax declaration for February 2022 and other reporting periods during the martial law, due to the ‘second registration limit” calculated according to Paragraph 200¹.9 of Article200 ¹ of the TCU.

All tax liabilities and tax credit declared by taxpayers during such martial law on the basis of payer’s primary (settlement) documents are subject to mandatory clarification (adjustment) taking into account data of tax invoices and adjustment calculations registered in the Unified Register of Tax Invoices.

VAT payments to the budget

Payment of agreed value added tax liabilities to the budget, declared by the taxpayer in submitted VAT tax declarations, is made by the taxpayer by replenishing electronic account in the SEA VAT.

In the future, within time limits set by the TCU, the State Tax Service on the basis of tax declarations submitted by taxpayers (clarifying calculations) will form appropriate registers for transfer of tax amounts to the budget. Such registers will be sent to the central executive body, which implements the state policy in the f treasury servicing of budget funds (State Treasury) in due time, for transfer of such amounts to the budget.

Accordingly, funds that taxpayers credited to the electronic account in the SEA VAT will be taken into account during calculation of the registration limit size, calculated according to Paragraph 200¹.3 Article 200¹ of the TCU.

Glory to Ukraine!