Novations regarding the VAT come into effect from October 1: cash method in the energy sector continues to operate and new benefit is introduced

Law of Ukraine № 4536-IX as of 16.07.2025 “On amendments to the Tax Code of Ukraine and other legislative acts of Ukraine in connection with adoption of the Law of Ukraine “On integrated prevention and control of industrial pollution" and in order to improve certain provisions of tax legislation”” enters into force from October 1, 2025 (hereinafter – Law № 4536). 

It introduced a number of changes regarding the value added tax.

Main novations:

- use of the VAT cash method for supply of electricity, coal and/or its enrichment products, centralized water supply and wastewater disposal has been extended until January 1, 2028.

-  introduction of the new VAT benefit:

- application of the VAT exemption regime for the transfer of land reclamation systems in the state and municipal ownership;

- such exemption applies if the transfer of systems is carried out free of charge and only to the water user organizations according to the Law of Ukraine № 2079-IХ as of 17.02.2022 “On the water user organizations and stimulation of hydrotechnical land reclamation”.

Important: this benefit is temporary and will be valid until Ukraine becomes a full member of the European Union.

Applying benefit, the VAT liabilities according to provisions of Paragraph 198.5 Article 198 and Article 199 of the Tax Code are not accrued.

For reference:

Paragraph 4 of Part 1 Article 1 of the Law № 2079 stipulates that the water users’ organization (hereinafter – organization) is a non-profit legal entity established by owners and/or users of agricultural land plots to ensure the use, operation and maintenance of engineering infrastructure facilities of land reclamation systems in order to provide services for hydrotechnical land reclamation of land plots in territory served by the organization’s land reclamation network.