Some features of the VAT taxation in connection with restoration of 20% VAT rate on certain types of agricultural products

Accrual rules of the VAT liabilities and their adjustment, as well as preparation of tax invoices / adjustment calculations to tax invoices and their registration in the Unified register of tax invoices are set out in Articles 187, 192 and 201 of the Tax Code of Ukraine.

The Law of Ukraine as of 01.07.2021 № 1600-IX “On amendments to the Tax Code of Ukraine regarding the value added taxation rate for the supply of certain types of agricultural products” sets 20% value added tax rate for the VAT payers who carry out supply operations in the customs territory of Ukraine and import to the customs territory of Ukraine of agricultural products (goods) classified according to the following codes according to Ukrainian classification of the FEA products: 0102, 0103, 0104 10, 0401 (in the part of whole milk), 1002, 1004, 1204 00, 1207, 1212 91.

The Law provides for the following features:

1) if the first case in a supply of products (goods), specified in the first paragraph of Paragraph 542 Sub-section 2 Section XX of the Code, occurred before the entry into force of the Law № 1600 (before 01.08.2021), a recalculation of the value added tax rate and amount of tax on the date of second event is not carried out;

2) if after the entry into force of the Law № 1600 there is a refund of advance payment or delivered products (goods), specified in the first paragraph of Paragraph 542 Sub-section 2 Section XX of the Code, due to a decrease in the quantity or value of such products (goods), the first case of the specified date in a period from 01.03.2021 to 31.07.2021 inclusively, an adjustment of the value added tax liabilities amount in the direction of reduction is carried out, proceeding from the value added tax rate of 14%;

3) if after the entry into force of the Law № 1600 there is a supply of products (goods), specified in the first paragraph of Paragraph 542 Sub-section 2 Section XX of the Code, or transfer of funds in connection with an increase in the quantity or value of such products (goods), the first case in a supply of which occurred before the specified date, an adjustment of the value added tax liabilities amount is carried out on a basis of the value added tax rate of 20%.

If the taxpayer carries out supply operations of products (goods) in the customs territory of Ukraine, specified in the first paragraph of Paragraph 542 Sub-section Section XX of the Code, which were purchased before the entry into force of the Law № 1600, such taxpayer retains value added tax credit in the amount, which was accrued when purchasing such products (goods).

Therefore, if, starting from August 1, 2021, there is a supply of agricultural products of commodity items according to Ukrainian classification of the FEA products 0102, 0103, 0104 10, 0401 (for whole milk), 1002, 1004, 1204 00, 1207, 1212 91, the prepayment for which (the first case) occurred in a period from 01.03.2021 to 31.07.2021 inclusively, on the date of such delivery, a recalculation of the VAT rate and amount of tax applied / accrued on the date of the first case is not carried out. Similarly, the VAT rate and amount of tax are not recalculated if, starting from August 1, 2021, the payment is made for such products that were delivered (the first case) in a period from 01.03.2021 to 31.07.2021 inclusively.

If, starting from August 1, 2021, there is:

return of agricultural products of commodity items according to Ukrainian classification of the FEA products 0102, 0103, 0104 10, 0401 (for whole milk), 1002, 1004, 1204 00, 1207, 1212 91 or advance payment for such products delivered / paid in a period from 01.03. 2021 to 31.07.2021 inclusively,

change in quantity or value of such products, the first case of supply operation which took place in a period from 01.03.2021 to 31.07.2021 inclusively, in the direction of reduction or within previous amount, an adjustment calculation indicates the VAT rate specified in adjusted tax invoice, ie 14%.

If, starting from August 1, 2021, there is a transfer of funds in connection with an increase in value of agricultural products of commodity items according to Ukrainian classification of the FEA products 0102, 0103, 0104 10, 0401 (in the part of whole milk), 1002, 1004, 1204 00, 1207, 1212 91, the first case of supply operation which took place in a period from 01.03.2021 to 31.07.2021 inclusively, when adjusting tax liabilities, the value added tax rate of 20% is applied.

Above specified procedure for adjustment calculation also applies in the case of a change, starting from August 1, 2021, of the nomenclature of agricultural products of commodity items according to Ukrainian classification of the FEA products 0102, 0103, 0104 10, 0401 (in the part of whole milk), 1002, 1004, 1204 00, 1207, 1212 91), the first case of a supply operation which took place in a period from 01.03.2021 to 31.07.2021 inclusively.

For example, if in a period from 01.03.2021 to 31.07.2021 inclusively, an advance payment was received for agricultural products of commodity item according to Ukrainian classification of the FEA products 0102 and starting from 01.08.2021 agricultural products of commodity item according to Ukrainian classification of the FEA products 1004 are actually shipped, then the adjustment calculation must contain:

line indicators of the adjusted tax invoice, indicating 14% tax rate are indicated by a sign “-“ in the first line;

correct indicators of the product nomenclature with applied 20% tax rate are specified with a sign “+” in the second line.