Law of Ukraine No. 1797-VIII "On Amending the Tax Code of Ukraine for Improving the Investment Climate in Ukraine came into effect on 1 January 2017 and changed the VAT refunding procedure by introducing, inter alia, a Unified Public Register of Applications for VAT Refunding from the State Budget, instead of two registers that existed in 2016.
The Cabinet of Minister of Ukraine adopted on 25 January 2017 Resolution No. 26, by which it approved a new Procedure for Keeping the Register of Value Added Tax Refunding (the "Procedure"). This Procedure is aimed at automating the manner in which VAT is refunded to taxpayers and makes it more transparent and time-sensitive. The Procedure sets out a mechanism the Ministry of Finance of Ukraine will use to keep the Register by administering it as a separate information resource and ensuring that the information is protected.The Register is generated automatically based on databases of the State Fiscal Service and the Treasury of Ukraine.
Please see below a comparison between the new mechanism of VAT refunding and the previous one.
| VAT Refunding Mechanism Effective in 2016 |
VAT Refunding Mechanism Currently in Effect |
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A taxpayer files an application for refunding VAT from the state budget to the taxpayer's account and toward the repayment of its liabilities and amounts it owes to the State Budget by the 20th day of the month next following the reporting period. |
A taxpayer files an application for refunding VAT from the state budget to the taxpayer's account and toward the repayment of its liabilities and amounts it owes to the State Budget by the 20th day of the month next following the reporting period. |
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The application is recorded in the register of VAT refunding to taxpayers who meet the criteria set out in clause 200.19 of the Tax Code of Ukraine, or the application is recorded in the register of VAT refunding to taxpayers who do not meet the criteria set out in clause 200.19 of the Tax Code of Ukraine. |
The application is recorded in the Register of Applications for VAT Refunding from the State Budget (the "Register") within one operating day. |
| A desk audit of information contained in the declaration is carried out within 30 calendar days. |
A desk audit of information contained in the declaration is carried out within 30 calendar days. |
| A documentary audit of information contained in the declaration (if there are the grounds set out in clause 200.11 of the Tax Code of Ukraine) is carried out within 25 business days. | A documentary audit of information contained in the declaration (if there are the grounds set out in clause 200.11 of the Tax Code of Ukraine) is carried out within 30 calendar days. |
| The State Fiscal Service of Ukraine sends to the State Treasury Service of Ukraine its conclusions as to whether the refunding is lawful. |
The VAT refunding amount is verified automatically in the Register and the State Treasury Service of Ukraine refunds VAT to taxpayers' accounts based on the information relating to the amount so verified. |
The new VAT refunding mechanism offers the following advantages:
- Equal and transparent conditions are set for taxpayers;
- The procedure administering is simplified by introducing a unified Register;
- The Register is generated automatically and reflects information relating to verified refunding amounts;
- VAT is refunded automatically and there is no need of conclusions to be submitted by the State Fiscal Service of Ukraine to bodies of the State Treasury Service of Ukraine regarding the VAT amount requested to be refunded;
- The Register is published each day on the official website of the Ministry of Finance of Ukraine.