of August 3, 2011 No. 14015/6/16-1515-06
About VAT liability of services in raw materials supplied by the customer processing
The State Tax Administration of Ukraine considered the letter concerning the taxation the value added tax of services in raw materials supplied by the customer processing, the letter and conclusions of GNA and reports.
According to the subitem "b" of Item 185.1 of article 185 of the Tax Code of Ukraine (further - the Code) the taxation object of the VAT are transactions of taxpayers on delivery of services which place of delivery is located on customs area of Ukraine, according to article 186 of this Code.
By subitem 186.2.1 "g" of Item 186.2 of Article 186 it is determined that the place of delivery of services in conversion of raw materials is the place of the actual delivery of services.
At the same time according to the subitem "b" 195.1.3 of Item 195.1 of article 195 of the Code of transaction on delivery of services which provide works with the personal estate which is previously imported on customs area of Ukraine for accomplishment of such works and exported out of limits of customs area of Ukraine by the payer who performed such works or the nonresident receiver are assessed with tax on zero rate.
Works on conversion of goods which can actually include conversion (processing) of goods - installation, assembly, assembling and adjustment therefore other goods, including delivery of services in raw materials supplied by the customer conversion, and also upgrade and repair of goods are created that provides carrying out complex of transactions with partial or complete renewal of production resource of the object (or its components) determined by the specifications and technical documentation as a result of which accomplishment improvement of condition of such object is provided belong to works with personal estate.
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