Paying import VAT in instalments for certain machinery and equipment

On 1 January 2018, Law No 2245-VIII "On amendments to the Tax Code of Ukraine and certain legislative acts of Ukraine to provide for the balance of Budget revenues for 2018" (the "Law") came into force.

Amongst other issues, the Law introduces amendments to the Tax Code of Ukraine (the "Tax Code") and other legislative acts regarding taxation.

One of the more notable amendments provides for the possibility of paying import VAT by instalments.

Specifically, till 1 January 2020, taxpayers may apply to the tax office for approval of an instalment plan for paying import VAT on machinery and equipment included in the groups of codes of the Ukrainian Classification of Goods for Foreign Economic Activities (the "UCGFEA").

The instalment procedure is permitted for goods addressed by the following chapters of the UCGFEA:

  • Chapter 84: "Nuclear reactors, boilers, machines, equipment, their parts", including equipment for biofuel production;
  • Chapter 90: "Photographic, optical, control, measuring (including weighing), medical equipment, their parts"; and
  • Chapter 85: "Electric equipment, machines, their parts", particularly, wind powered electricity generators, electronic welding machines, and manufacturing and laboratory equipment for thermal processing.

According to the Law, the VAT payments are to be paid in equal instalments within up to a 24-month period. No penalties or late payment interest are to be applied to such payments. The payment obligations under such instalments are also required to be guaranteed by means of a bank guarantee or pledge.

The VAT payer becomes eligible for the relevant input VAT in the period of actual payment of VAT to the budget.

In order to apply and benefit from the instalment, taxpayers should import the machinery or equipment for their own use, not for trading purposes.

The exact procedure of how such instalments shall be paid and guaranteed is not available has yet to be adopted by the Ukrainian Government, but we will monitor this and notify you of future updates.

If you would like to know more about the subject covered in this publication, or our services, please contact Oleksandr Markov.