Changes in the VAT registration procedures

Order of the Ministry of Finance of Ukraine as of 21.10.2020 № 629, registered at the Ministry of Justice of Ukraine on 11.12.2020, amended the Regulation on registration of the value added tax payers (hereinafter – the Regulation).

Amendments to the Regulation provided implementation of norms of the Law of Ukraine as of January 16.01.2020 № 466-IX “On amendments to the Tax Code of Ukraine to improve tax administration, eliminate technical and logical inconsistencies in tax legislation” (hereinafter – the Law № 466) which simplifies existing registration procedures, re-registration and registration cancellation of the VAT payers.

What has changed in the registration procedures of VAT payers:

1. Interaction between business entities and controlling bodies during registration of the VAT payer was exclusively changed into electronic format. Specifically, the Regulation excludes the rule on possibility of submitting registration application of the VAT payer (hereinafter – the Application) personally by an individual or directly by the head or representative of a legal entity to the controlling body. Any individual who is subject to mandatory registration or made a decision for voluntary registration as a VAT payer, submits to the controlling body at its location (residence) the Application by electronic means in electronic form. There is no other way to submit the Application.

2. Format of the Application of newly created business entities during the registration of business about their desire to be registered as VAT payers was changed. Newly created business entities instead of submitting to the state registrar the Application for voluntary registration as VAT payer (as an appendix to the Application for state registration) may declare their desire to voluntarily register as a VAT payer during the state registration of a legal entity or state registration of an individual – entrepreneur by filling in the relevant section on choice of taxation system in the Application for state registration. Relevant application (in the state registration sphere) or information is submitted to the supervisory authorities in the manner prescribed by the Law of Ukraine as of 05.05.2003 № 755-IV “On the state registration of legal entities, individuals – entrepreneurs and public associations” (hereinafter – the Law № 755).

3. Deadline for submitting the Application in case of voluntary registration as VAT payer, as well as in case of choosing or switching to the simplified taxation system, changes in the single tax rate is not later than 10 calendar days before the start of tax period from which such individuals will be considered as the VAT payers and will be entitled to a tax credit and tax invoices (instead of 20 calendar days before the start of tax period).

4. Correspondence rules of controlling bodies with business entities based on the results of consideration of Applications are established depending on the method of interaction with controlling bodies chosen by business entities. As follows, if individual chose method of interaction with regulatory authorities in the electronic form through the Electronic cabinet, the refusal to register or a suggestion to submit a new Application for registration is sent by the controlling body to the Electronic cabinet. If an individual refused to use the Electronic cabinet or did not specify method of interaction with the supervisory authorities, the refusal to register or a suggestion to submit a new Application shall be sent to the E-mail address from which the Application was received.

At the same time, refusal to register a newly created entity as a VAT payer is sent by the controlling body to the E-mail address specified in Application (in the state registration sphere) or information received by the controlling body according to the Law № 755. If such data on the E-mail address is not available, the refusal to register is sent to the location (residence) of the newly created entity, data of which is contained in such Application (in the state registration sphere) or data.

5. Peculiarities of registration of a legal entity formed by transformation as a VAT payer, depending on the date of state registration of such individual, have been abolished. That is, regardless of the date of state registration of individual formed by transformation, if such individual wishes to re-register, he / she within 10 working days following the date of completion of transformation, submits Application marked as “Re-registration” to the controlling body.

6. Procedures for re-registration of the VAT payers have been simplified. Particularly, re-registration in case of change of location (residence) by the business entity is not provided and re-registration in connection with change of name (except transformation) (full name) of the VAT payer which is included in the Unified state register of legal entities, individuals – entrepreneurs and public formations (hereinafter – the Unified State Register) is carried out by the controlling body without submitting Application on the basis of information from the Unified State Register.

7. An automated procedure for cancellation of the VAT payer registration has been introduced under appropriate conditions, which excludes influence of the human factor in making a management decision on such cancellation. Cancellation of the VAT payer registration is carried out by the controlling body automatically on the basis of information on state registration of termination of a legal entity (excepting transformation) or business activity of individual – entrepreneur obtained according to the Law № 755 or according to the register of single tax payers on the application by the business entity of a simplified taxation system that does not provide for the payment of value added tax. At the same time, if on the basis of information from the Unified State Register it is not possible to automatically establish the cancellation date of VAT payer registration, the controlling body independently determines such date and makes independent decision on registration cancellation of VAT payer.  

State Tax Service of Ukraine informs that the software for maintaining Register of the VAT payers is being finalized in terms of automatic re-registration of the VAT payers and automatic registration cancellation of VAT payers on the basis of relevant information from the Unified State Register and data from Register of single taxpayers. Until the implementation of software’s technical capability to perform these procedures automatically, the existing procedures for maintaining Register of the VAT payers will be applied.