Application of the single tax of the third group at a rate of 2% for VAT payers
We inform you that the State Tax Service of Ukraine has provided clarification on the most painful issue of the application of the single tax of the third group at a rate of 2% for VAT payers, because this issue is rather unclear in the text of the Tax Code.
The State Tax Service of Ukraine explained the following: the application of the tax rate of 2% of income provides for the inclusion of value added tax in the single tax (as before in the case of the single tax rate of 5% of income).
Business entities who choose the third group of single tax at a rate of 2% of income and at the time of transition to a simplified tax system are in the status of a VAT payer, in accordance with the provisions of subparagraphs 9.5 and 9.9 of paragraph 9 of subsection 8 of section XX “Transitional Provisions” of the Code VAT payer registration is not cancelled, but is suspended for the period when such a business entity is in the third group of the single tax at the rate of 2% of income.
Herewith such taxpayers are deprived of the right to make tax invoices and calculations of adjustments on operations, the date of tax liabilities on which occurs (occurred) during the stay of such business entity in the third group of the single tax at the rate of 2% of income.
Since the economic entity in the third group of the single tax at a rate of 2% of income has no objects of taxation of value added tax, such an entity has no obligation to accrue, pay and submit tax returns for value added tax on operations for the supply of goods, works and services, the supply place of which is located in the customs territory of Ukraine.
Consequences of VAT payers in the automatic restoration of the rules of accrual and payment of VAT after the end of martial law
In the tax returns for the first reporting period after the end of martial law, the VAT payer in accordance with paragraph 198.5 of Article 198 of the Code shall accrue tax liabilities on the value of goods, services, non-current assets used in operations that are not subject to taxation (sold during the martial law, emergency situation), the tax amounts on which were included in the tax credit at the date of transition to a simplified tax system at a rate of 2%:
for goods/services – on the basis of the cost of acquisition of such goods/services;
for non-current assets which are actually used (sold) during the period when such taxpayer is on simplified taxation system at 2% of income – on the basis of the book (residual) value at the beginning of the reporting (tax) period during which such operations are performed.
Considering the procedure for automatic restoration of the rules of accrual and payment of VAT after the end of martial law, the VAT payer retains the right to use the amounts of VAT included (subject to inclusion) in the tax credit on the basis of tax invoices registered in the Unified State Tax Register, on the date of transition to the simplified system of taxation at the rate of 2%, for goods/services not sold during martial law, when calculating tax liabilities for VAT in the tax returns for the first reporting period after the end of martial law, emergency situation and subsequent reporting periods.