Force majeure and product destruction: when the VAT liabilities are not accrued

Press service of the State Tax Service of Ukraine, published 10 August 2026 at 14:01 Chapter: News

During a state of war or emergency, products purchased by the VAT payer for use in taxable VAT transactions may be destroyed or lost as a result of force majeure. In such case, they are not considered to have been used in the non-taxable transactions or in transactions that are not the VAT payer’s economic activity.

Accordingly, obligation to accrue the VAT liabilities under Paragraph 198.5 Article 198 of the Tax Code of Ukraine does not arise.

This norm is provided for in Paragraph 32¹ Sub-section 2 Section XX of the Tax Code of Ukraine. At the same time, it can be used only if there is proper documentary confirmation of occurrence of the force majeure circumstances.

In particular, it is obligatory to have:

- primary documents confirming the fact of product destruction or loss;

- certificate of the force majeure circumstances issued by the Chamber of Commerce and Industry of Ukraine or regional chamber of commerce and industry authorized by it.

Presence of such certificate is obligatory condition for application of the specified norms of the Tax Code. Chamber of Commerce and Industry of Ukraine and its authorized regional chambers certify the force majeure circumstances and issue certificate within seven days from the date of the business entity’s application.

It should be noted that the VAT amounts that were included in the tax credit carrying out transactions for the product purchase that were subsequently destroyed or lost as a result of the above specified circumstances are not included in calculation of the amount of budget compensation. They are included in the tax credit of the next reporting (tax) period until they are fully repaid.

Therefore, in case of product destruction or loss due to the force majeure, the VAT payer is exempted from tax liability if there are properly executed primary documents and the force majeure certificate. At the same time, the VAT amounts for such products cannot be declared for budget reimbursement, but are transferred to the tax credit of subsequent reporting periods.