Tax authorities cite the consequences of VAT in the case of the transition to a single tax at a rate of 2% during the war
The interest rate for single taxpayers of the third group who use the features of taxation established by paragraph 9 of subsection 8 of section XX “Transitional Provisions” of the Tax Code of Ukraine (hereinafter – the Code) is set at 2 percent of income.
Pursuant to sub-clause 9.5 of clause 9 of subsection 8 of section XX “Transitional Provisions” of the Code, single taxpayers of the third group who use the features of taxation established by this clause are exempted from the obligation to accrue, pay and file value added tax reports. supply of goods, works and services, the place of supply of which is located in the customs territory of Ukraine.
Thus, the application of a tax rate of 2 percent of income involves the inclusion of value added tax in the single tax (as in the case of a single tax rate of 5 percent of income).
Pursuant to sub-clause 9.9 of clause 9 of subsection 8 of section XX “Transitional Provisions” of the Code after cessation or abolition of martial law, state of emergency of the third group, who on the day of cessation or abolition of martial law this paragraph, from the first day of the month following the month of cessation or abolition of martial law, state of emergency in Ukraine, lose the right to use the features of taxation provided for in this paragraph and are automatically considered to apply the tax system on which such taxpayers were choosing the features of taxation provided for in this paragraph.
That is, since the single tax regime at the rate of 2 percent has a limited (temporary) validity period with subsequent automatic renewal of the VAT calculation procedure, it differs from the “classic” single tax established by paragraph 291.5 of Article 291 of the Code.
Therefore, economic entities that choose the third group of the single tax with a rate of 2 percent of income and at the time of transition to the simplified taxation system are VAT payers, in accordance with the provisions of subparagraphs 9.5 and 9.9 of paragraph 9 of subsection 8 of section XX “Transitional Provisions” VAT payer is not canceled.
Given that during martial law VAT payers who use the features of taxation established by paragraph 9 of subsection 8 of section XX “Transitional Provisions” of the Code are exempt from the obligation to accrue, pay and file value added tax returns, all transactions for the sale of goods and services, the place of supply of which is located in the customs territory of Ukraine, are considered not subject to VAT, tax invoices for such transactions are not drawn up.
Consequences for VAT payers when automatically renewing the rules of accrual and payment of VAT after the end of martial law
In the tax reporting for the first reporting period after the end of martial law, state of emergency, the VAT payer in accordance with paragraph 198.5 of Article 198 of the Code must accrue tax liabilities on the value of goods, services, non-current assets used in non-taxable transactions during the period of martial law, state of emergency), the amount of tax on which were included in the tax credit on the date of transition to a simplified system of taxation at a rate of 2 percent:
for goods / services – based on the cost of purchasing such goods, services,
on non-current assets that are actually used (sold) during the stay of such a payer on the simplified taxation system at a rate of 2% of income – based on the book (residual) value at the beginning of the reporting (tax) period during which such transactions.
Such transactions must be reflected in the relevant lines (line 4) “Accrued tax liabilities in accordance with paragraph 198.5 of Article 198 and paragraph 199.1 of Article 199 of the Tax Code of Ukraine for taxable transactions” of the VAT tax return.
Accordingly, the payer is obliged to ensure the preparation of no later than the last day of the first reporting period after the end of martial law, state of emergency and register in the Unified Register of tax invoices consolidated tax invoice for such goods / services, non-current assets.
For example: martial law, state of emergency ends in June 2022, such payer for the first reporting tax period July 2022 submits a declaration in which in accordance with paragraph 198.5 of Article 198 and subparagraph 9.5 of paragraph 9 of subsection 8 of section XX “Transitional Provisions” of the Code ‘obligations on goods sold during the application of the single tax at the rate of 2 percent of income and for which on the date of transition to the simplified taxation system (April 1, 2022) the amount of VAT were included in the tax credit.
Given the procedure for automatic renewal of VAT accrual and payment rules provided for in subparagraph 9.9 of clause 9 of subsection 8 of subsection 8 of section XX of the Code, the VAT payer retains the right to use VAT amounts included (to be included) in the tax credit on the basis of tax invoices registered in ERPN, on the date of transition to the simplified taxation system at the rate of 2 percent, for goods / services not sold during martial law, when calculating VAT liabilities in tax reporting for the first reporting period after the end of martial law, state of emergency and subsequent reporting periods. That is, the data of line 21 of the VAT tax return for the last reporting period before the transition to the simplified taxation system shall be transferred to line 16.1 “Negative value of line 21 of the previous reporting (tax) period” for the first reporting period after the end of martial law.
In accordance with the procedure for filling out the VAT return, the amount of tax credit for the first reporting (tax) period after martial law, formed by the value of line 16.1, when calculating tax liabilities under paragraph 200.1 of Article 200 of the Code will reduce the amount of accrued tax liabilities VAT tax return under paragraph 198.5 of Article 198 of the Code.
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