Clauses 2 and 3 of Sub-paragraph "c" Paragraph 193.1 Article 193 of the Tax Code of Ukraine (hereinafter – Code) stipulate that 7 percent VAT rate is set for operations with:
provision in the customs territory of Ukraine and import to the customs territory of Ukraine of medicinal products approved for production and use in Ukraine and entered in the State register of medicinal products, as well as medical devices that are entered in the State register of medical equipment and medical devices or meet requirements of relevant technical regulations, which is confirmed by a document on compliance, and allowed to be provided on market and/or put into operation and use in Ukraine;
provision to the customs territory of Ukraine and import to the customs territory of Ukraine of medicines, medical devices and/or medical equipment approved for use within the scope of clinical trials, permission for conduction of which has been granted by the central body of executive power, which ensures formation of state policy in the health care sphere.
Carrying out supply of products (including medicines and medical devices), the taxpayer – seller of such products is obliged to compile tax invoice within the established terms, register it in the Unified register of tax invoices and provide it to the buyer at request (Paragraph 201.10 of the Code).
Carrying out operations involving import of products to the customs territory of Ukraine, customs declaration is compiled (Paragraph 8 Article 257 of the Customs Code of Ukraine).
In view of above specified, supply to the customs territory of Ukraine and/or import to the customs territory of Ukraine of medicinal products and medical devices are subject to 7 percent VAT rate according to Sub-paragraph "c" Paragraph 193.1 Article 193 of the Code, that is, provided that:
medicines:
- allowed for production and use in Ukraine;
- included in State register of medicinal products;
medical products:
- allowed to be offered on market and/or put into operation and use in Ukraine;
- are included in the State register of medical equipment and medical devices or meet requirements of relevant technical regulations, which is confirmed by a document on compliance.
At the same time, in case that at least one of the specified conditions provided for in Clauses 2 and 3 of Sub-paragraph "c" Paragraph 193.1 Article 193 of the Code is not observed during supply to the customs territory of Ukraine and/or import of medicines/medical products to the customs territory of Ukraine, such operations are subject to the VAT in generally established manner at 20 percent rate.
In addition, temporarily for a period of the anti-terrorist operation and/or implementation of measures to ensure national security and defense, repulse and deter armed aggression of russian federation, and/or introduction of martial law according to legislation, separate operations of import to the customs territory of Ukraine and supply of medicinal products and medical devices in the customs territory of Ukraine are exempted from the VAT under conditions specified in Paragraph 32 Sub-section 2 Section XX of the Code.
Forms and procedure for filling out and submitting value added tax declarations are approved by Order № 21 of the Ministry of Finance of Ukraine as of 28.01.2016, which was registered in the Ministry of Justice of Ukraine on 29.01.2016 under № 159/28289 (hereinafter – Order № 21).
Declaration is submitted by payer for basic reporting (tax) period, which is equal to a calendar month, within 20 calendar days following the last calendar day of reporting (tax) month, using form established on the date of submission.
Payer’s tax accounting data is entered into declaration separately for each reporting (tax) period without cumulative sum.
The taxpayer independently calculates amount of tax liability, which notes in tax declaration. Data given in tax reporting must correspond to data of payer's accounting and tax records.
Results of operations carried out by the taxpayer in reporting (tax) period for supply/purchase in the customs territory of Ukraine and/or import to the customs territory of Ukraine of medicinal products, medical devices, as well as accrual of the VAT liabilities in cases provided for by the Code, which are taxed at 7 percent rate, are reflected in the VAT declaration:
section I "Tax obligations":
- supply of products in the customs territory of Ukraine in line 1.2, which requires submission of Annex 1;
- accrual of tax liabilities according to Paragraph 198.5 Article 198 and Paragraph 199.1 Article 199 of the Code in line 4.2, which provides for submission of Annexes 1 and 6;
- adjustments for operations according to Paragraph 198.5 Article 198 and Paragraph 199.1 Article 199 of the Code in line 4.2.1, which provides for submission of Annexes 1 and 6;
- adjustment of tax liabilities in line 7, which provides for submission of Annex 1;
- adjustment of tax liabilities in connection with the non-target use of products imported with application of the VAT exemption in line 8, which does not require submission of Annexes;
section II "Tax credit":
- purchase of such products in the customs territory of Ukraine in line 10.2, which requires submission of Annex 1;
- import to the customs territory of Ukraine in line 11.2, which does not require submission of Annexes;
- adjustment of tax credit in line 14, which requires submission of Annex 1;
- adjustment of tax credit in connection with recalculation of share of the use of non-current assets acquired before July 1, 2015 in taxable operations in line 15, which provides for submission of Annex 6.
Annexes are added to declarations if there are cases that must be reflected in such Annexes (Paragraph 11 Section III of Order № 21).
Supply in the customs territory of Ukraine of medicinal products, medical devices, which are exempted from the VAT taxation, and volume adjustments for such operations, according to provisions of the Code, are reflected in lines 5, 5.1 and 5.1.1., which requires submission of Annex 5.
Herewith, procedure for determining amounts of the VAT unpaid by taxpayer to the budget in connection with receiving tax benefits is provided for in Section V1 of Order № 21.
Information on amounts of the VAT unpaid by taxpayer to the budget in connection with receipt of tax benefits, calculated in manner specified by this Section, is indicated in Table 2 of Annex 5 for operations exempted from taxation according to benefit code determined according to directory of benefits.
Directory № 122/1 of tax benefits, which are losses of budget revenues, as of 30.01.2024 approved by the State Tax Service, stipulates that the VAT benefits, provided for in Paragraph 32 Sub-section 2 Section XX of the Code, are classified under two codes 14060512 and 14060513.
Calculation of the VAT amounts not paid to the state budget for supply of products/services that are exempted from taxation is carried out according to formula specified in Paragraph 3 Section V1 of Order № 21.