Regarding the accrual procedure of tax liabilities according to Paragraph 198.5 Article 198 of the TCU for products/services, non-current assets, purchased with the VAT before the beginning of application of taxation peculiarities, established by...Chapter: News

Regarding the accrual procedure of tax liabilities according to Paragraph 198.5 Article 198 of the TCU for products/services, non-current assets, purchased with the VAT before the beginning of application of taxation peculiarities, established by Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU and used by the taxpayer during application of special taxation peculiarities established by Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU

Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the Tax Code of Ukraine (hereinafter – TCU) provides for that temporarily, from 01.04.2022 until termination or abolition of the martial law or state of emergency on the territory of Ukraine, but not later than 01.08.2023, provisions of Section XIV of the TCU are applied taking into account peculiarities provided for in Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU.

Sub-paragraph 9.5 Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU stipulates that operations carried out by the third-group single tax payer who uses special taxation peculiarities established by this Paragraph (simplified taxation system at the 2% rate of income) are considered to be not subject to the value-added tax.

Sub-paragraph 9.9 Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU stipulates that taxpayers who refused to use special taxation peculiarities provided for in Paragraph 9 of Sub-section 8 Section "Transitional Provisions" of the TCU for products /services, non-current assets purchased/produced with the VAT before application of special taxation peculiarities, established by Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU, which were used (supplied, sold) by the third-group single tax payer during application of taxation peculiarities, established by Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU, in operations that are not subject to taxation, the VAT payer is obliged not later than the last day of reporting period in which registration as the VAT payer was renewed, to calculate tax liabilities according to Paragraph 198.5 Article 198 of the TCU.

Herewith, Sub-paragraph 9¹.2. Paragraph 9¹ of Sub-section 8 Section XX "Transitional Provisions" of the TCU stipulates that taxpayers whose registration as the VAT payer has been suspended according to Sub-paragraph 9.5 Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU and for whom, starting from 01.08.2023, rights and obligations, established by Section V and Sub-section 2 Section XX of the TCU, were automatically renewed for products, non-current assets, purchased/produced/imported to the customs territory of Ukraine with the VAT before application of tax peculiarities, established by Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU, which were used (supplied, sold) during application of taxation peculiarities, Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU, are obliged to accrue tax liabilities not later than 31.10.2023 according to Paragraph 198.5 Article 198 of the TCU.

As follows, taxpayers who, by 01.08.2023 independently refused to use special taxation peculiarities, provided for by Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU, accruing the VAT liabilities, according to Paragraph 198.5 Article 198 of the TCU, use norms of Sub-paragraph 9.9 Paragraph 9 of Sub-section 8 Section XX "Transitional Provisions" of the TCU, and taxpayers whose registration as the VAT payers was automatically renewed from 01.08.2023, accruing such tax liabilities apply norms of Sub-paragraph 9¹.2. Paragraph 9¹ of Sub-section 8 Section XX "Transitional Provisions" of the TCU.