VAT rate reduced to 14%
Please be informed that on 17 December 2020 the Verkhovna Rada of Ukraine adopted the Law “On Amendments to the Tax Code of Ukraine regarding the rate of value added tax on transactions for the supply of certain types of agricultural products” (previously – Draft Law № 3656).
The law amends paragraph 193.1 of Article 193 of the Tax Code of Ukraine with a new subparagraph “г”, which establishes a new VAT rate of 14% on transactions involving the supply of agricultural products on the customs territory of Ukraine and imports into the customs territory of Ukraine, which is classified under the following commodity items in accordance with the Ukrainian Classification of Foreign Economic Activity 0102; 0103; 0401 (in relation to whole milk), 1001, 1002,1003, 1004, 1005, 1201, 1204 00, 1205, 1206 00,1207.
These goods are classified according to the UCG FEA:
- 0102 (cattle, live);
- 0103 (pigs, live), 1001 (wheat),
- 1002 (rye), 1003 (barley),
- 1004 (oats),
- 1005 (corn),
- 1201 (soy beans),
- 1204 00 (flax seeds),
- 1205 (rapeseed seeds),
- 1206 00 (sunflower seeds),
- 1207 (seeds and fruits of other oilseeds),
- 1212 91 (sugarbrowns).
A new paragraph 54-1 has been added to subsection 2 of section II “Transitional Provisions” of the Tax Code to read as follows:
«54-1. For the purposes of applying the value added tax rate on deliveries on the customs territory of Ukraine and imports into the customs territory of Ukraine of agricultural products (goods), which are classified by codes according to UCG FEA: 0102, 0103, 0401 (in relation to whole milk),1001, 1002, 1003, 1004, 1005, 1201, 1204 00, 1205, 1206 00, 1207, 1212 91, except for operations on import of goods defined in paragraph 197.18 of article 197 of this Code, established by the Law of Ukraine “On Amendments to the Tax Code of Ukraine regarding the value added tax rate on operations on the delivery of certain agricultural products to the customs territory of Ukraine and import of certain types of agricultural products to the customs territory of Ukraine establish that the tax rate that was in effect before the first day of the reporting (tax) period, from which the 14 per cent value added tax rate applies, is applilcable in the following cases:
1) delivery on the customs territory of Ukraine of the products (goods) defined in the first part of this paragraph, which occurs after the transfer of prepayment (advance payment) by the taxpayer, received by the first day of the reporting (tax) period, from which the value added tax rate of 14 per cent is applied;
2) adjustments to tax liabilities for prepayment (advance payment) refunds or returns of products (goods) received before the first day of the reporting (taxation) period from which the 14 per cent value added tax rate is applied;
3) adjustment of tax liabilities in case of changes in the contract (contractual) value of products (goods) as defined in the first part of this paragraph, the delivery of which took place before the first day of the reporting (tax) period, from which the value added tax rate of 14 per cent is applied.
In case a taxpayer performs operations on supplying products (goods) on the customs territory of Ukraine defined in part one of this paragraph, which was acquired before the first date of the reporting (tax) period from which the value added tax rate of 14 percent is applied, the value added tax credit in the amount that was accrued upon acquisition and/or supply of such agricultural products (goods) is saved for such taxpayer”.
The Law shall enter into force on the day following the day of its publication, and shall apply to tax periods from the first day of the month following the month of publication of the Law.