Following the amendments to the Tax Code of Ukraine (the "TCU") regarding the possibility to pay import VAT in instalments (please refer to our news release in January), we would inform you that the Ukrainian Government – by its Order No 85 dated 7 February 2018 (effective from 21 February 2018) – adopted a Procedure for implementing an instalment plan for import VAT payments, as well as for providing the necessary guarantee (the "Procedure").
Based on the Procedure, taxpayers should file an application as per the template form with the customs office. Other than the standard documents related to customs control (as defined by the Customs Code of Ukraine) taxpayers should also file with the application:
- a business project outline, business plan or any other document specifying how the equipment will be used, together with the economic calculations and expected results of activity; and
- any other documents establishing the availability of premises and production capacity (e.g., conclusions of state bodies, experts, technical documentation etc.)
The customs authorities shall decide on the application within 10 working days if the amount of VAT is less than UAH 1 million. Otherwise, the decision should be made and agreed with the Head of the State Fiscal Service of Ukraine within 25 working days.
The following factors, amongst others, shall be considered by the customs office when reviewing the application for import VAT instalments:
- that the equipment indicated by the taxpayer in its application corresponds with the relevant Ukrainian Classification of Goods for Foreign Economic Activities' codes as envisaged by paragraph 65 of the subsection 2 of the Section XX of the Tax Code of Ukraine
- confirmation of the value of the equipment stated in the taxpayer’s application
- confirmation that the origin of the equipment is not that of an occupied country or a country occupying another country (as recognised by Ukrainian legislation) and/or is not imported from such occupied territories or countries
- That there are no outstanding tax liabilities and/or special sanctions imposed by the Ministry of Economic Development and Trade of Ukraine.
Based on a positive decision, the taxpayer shall then pay the first instalment and provide a guarantee of the remaining VAT amount according to Part X of the Customs Code of Ukraine, or by means of a bank guarantee, in accord with the legislation.
During the period of the instalment plan, the taxpayer shall on a monthly basis file with the tax office a report confirming appropriate usage of the imported equipment.
If you would like to know more about the subject covered in this publication, or our services, please contact Oleksandr Markov.