Ukraine Business Tax Changes: 2020 Update

On 23 May 2020, the amendments introduced to the Tax Code of Ukraine by the law of 16 January 2020 No. 466-IX came into force (the “Law No. 466”). The law implemented a wide range of changes declared for development and simplification of tax administration, its reconciliation with the world standards, introduction of BEPS action plan in Ukrainian laws, etc.

In relation to the value added tax, the Law No. 466 introduced the changes intended for the simplifying administration of VAT, application of the unified approaches to reporting and filing. The main novelties related to the regulation of framework related to value added tax are as follow

Registration as a VAT-payer

The timeframe for voluntary registration of a business entity as a VAT-payer was shortened to 10 calendar days before the beginning of the tax period, instead of 20 calendar days. Registration can be accomplished in electronic form or in written form, in case of original registration of the business entity.

Unified reporting period for VAT

The Law No. 466 introduced monthly period as a unified reporting period for all categories of VAT-payers, instead of previously effective quarter period. Last quarter reporting period expired on 30 June 2020, which shall be reported by 10 August 2020.

Starting from 01 July 2020 all VAT-payers are required to file VAT-declarations on a monthly basis. Negative balance between VAT credit and VAT debit shall be transferred to VAT declarations for July 2020.

Extended documentary basis for the confirmation of VAT credit

In accordance with the restated clause 198.1 article 198 of the Tax Code of Ukraine, the list of documents which may be used as a documentary confirmation of the VAT credit was supplemented with the temporary, additional, and other types of the customs declarations.

New penalties for violation of deadlines for registration of VAT invoices

The Law No. 466 amended the amounts of penalties for failure to meet the deadlines for registration of VAT invoices:

  • in case of non-registration of a VAT invoice – 5% of the amount of a transaction net of VAT, and not exceeding UAH3,400 (before, 50% of the amount of VAT without limitation of the amount of the penalty);
  • in case of delay in registration of a VAT invoice – 2% of the amount of a transaction net of VAT, and not exceeding UAH1,020 (before, 10-20% of the amount of the transaction, without limitation of the amount of the penalty).

The above penalties have been introduced with respect to VAT invoices which have to be prepared in accordance with the transactions exempted from VAT or subject to 0% VAT.

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