LETTER OF STATE TAX ADMINISTRATION OF UKRAINE

of February 10, 1998 No. 1346/10/16-1215-26

About charges and collection of the VAT in case of performance of works by the nonresident in the territory of Ukraine for foreign currency in the conditions of operation of the Decree of the Cabinet of Ministers of Ukraine "About the value added tax"

The State Tax Administration of Ukraine reviewed request of State Tax Administration in the city of Kiev of 20.01.98 N 14/7/15-214 on calculation and collection of the VAT in case of performance of works by the nonresident in the territory of Ukraine for foreign currency in the conditions of operation of the Decree of the Cabinet of Ministers of Ukraine "About the value added tax" and reports the following.

According to article 2 of the Decree of the Cabinet of Ministers of Ukraine of 26.12.92 "About the value added tax", and Item 3 of the Instruction on procedure for charge and the tax discharge on value added approved by the order GGNI of Ukraine from 10.02.93 N 3 and Ukraine registered in Ministry of Justice 31.03.93 for N 18, international associations, including the international non-governmental organizations, foreign legal entities and citizens who perform on its own behalf productive or other business activity in the territory of Ukraine are considered N 14-92 as taxpayers. If the specified subjects of business activity have no settlement accounts in organizations of banks and have no permanent missions in Ukraine (are not taxpayers), the value added tax is paid by buyers of goods, customers of works (services).

By article 3 of the specified Decree it is determined that the taxation objects are turnovers from sales of goods (works, services), except their realization for foreign currency. In case of receipt of services from the nonresident not rendering of services by the payer, but acquisition by the payer of import services is carried out. By article 28 of the Law of Ukraine "About the Government budget of Ukraine for 1994" which action was prolonged before enforcement of the Law of Ukraine "About the value added tax" is determined that the value added tax joins in the price (rate) of goods (works, services), including import, at the established rate to taxable turnover which does not include the value added tax.

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