The Main Department of the State Tax Service in Kyiv informs that if the parties enter into purchase and sale agreements on the terms of a commodity loan, which provides for deferral of final payments for a specified period and at interest, regardless of the debt instrument and form of payment for such goods VAT taxation of the seller of such goods (works, services) is determined based on the contract value of these goods, increased by the total amount of interest specified in the contract.
In accordance with paragraphs. 14.1.245 item 14.1 of Article 14 of the Tax Code of Ukraine (hereinafter – TCU) commodity credit – goods (works, services) transferred by a resident or non-resident to legal or natural persons under the terms of the contract, which provides for deferral of final payments for a specified period and at interest. Commodity credit involves the transfer of ownership of goods (works, services) to the buyer (customer) at the time of signing the contract or at the time of physical receipt of goods (works, services) by such buyer (customer), regardless of the time of repayment.
The object of VAT taxation are transactions of taxpayers for the supply of goods, the place of supply of which is located in the customs territory of Ukraine, in accordance with Article 186 of the TCU, including transactions for the transfer of ownership of collateral to the borrower (creditor), goods transferred on the terms of a trade credit (paragraph “a” of paragraph 185.1 of Article 185 of the TCU).
If the taxpayer carries out transactions for the supply of goods / services that are subject to taxation under Article 185 of the TCU, to secure the debt obligations of the buyer, provided to such taxpayer in the form of promissory notes or other promissory notes (hereinafter – promissory note) issued by such a buyer or a third party, the tax base is the contractual value determined in accordance with paragraph 188.1 of Article 188 of the TCU, excluding discounts or other discounts from the face value of such promissory note, and interest-bearing promissory notes – such contractual value increased in the amount of interest accrued or to be accrued on the face value of such promissory note (p.189.7 Article 189 TCU).
In the case of supply of goods under commodity credit agreements (commodity loan, installments), the terms of which provide for the payment (accrual) of interest, the date of increase of tax liabilities in part of such interest is the date of accrual in accordance with the terms of the agreement (p.187.3 Article 187) TCU).
Source: gov.ua
