LAW OF UKRAINE

of April 3, 1997 No. 168/97-BP

About the value added tax

List of amending documents

This Law determines taxpayers on value added, objects, base and rates of the taxation, the list not of the taxable and exempted from the taxation transactions, features of the taxation of export and import transactions, concept of tax delivery note, accounting treatment, the reporting and entering of tax into the budget.

Article 1. Determination of terms

In this Law terms are used in the following value:

1.1. Tax, the taxation, the taxpayer, taxable transaction (in the corresponding cases) - the value added tax, taxation to value added, the taxpayer on value added, transaction, liable to tax on value added.

1.2. Person - any of the stated below persons, irrespective of whether such person is resident or not:

the subject of business activity, including the company with foreign investments irrespective of form and time of introduction of these investments;

other legal entity who is not the subject of business activity;

the physical person (the citizen, the foreign citizen and the stateless person) which performs the activities referred to entrepreneurial according to the legislation or imports (sends) goods on customs area of Ukraine.

representation of the nonresident who does not have the status of the legal entity.

For the purposes of the taxation two or more persons performing general (joint) activities without creation of the legal entity are considered as individual within such activities.

Account of results of general (joint) activities is kept by the taxpayer authorized on it by other parties according to terms of the contract, separately from accounting of economic results of such taxpayer.

For the purposes of the taxation the economic relations between participants of general (joint) activities are equated to the relations on the basis of separate civil agreements.

The procedure for tax accounting and the reporting of results of general (joint) activities is established by the central tax authority.

1.3. The taxpayer - person who according to this Law shall perform deduction and entering into the budget of the tax paid by the buyer or person who imports goods on customs area of Ukraine.

1.4. Delivery of goods - any transactions performed according to purchase and sale agreements, exchanges, deliveries and other civil agreements which provide assignment of rights of property on such goods for compensation irrespective of terms of its provision, and also transactions on free delivery of goods (results of works) and transaction on cession of property by the lessor (lessor) on balance of the lessee (leasing recipient) according to agreements of finance lease (leasing) or delivery of property according to any other agreements which conditions provide payment deferral and transfer of property on such property no later than date of the last payment.

Do not treat delivery of transaction on transfer of goods within agreements of storage (safe custody), trust management, operational lease (leasing), other civil agreements which are not providing transfer of property (uses or orders) on such goods to other person.

Delivery of services - any transactions of civil nature on performance of works, provision of services, provision of the right to use or the order of goods, including intangible assets, and also on delivery of any others, than goods, property objects for compensation, and also transactions for non-paid performance of works, provision of services. Delivery of services, in particular, includes provision of the right to use or the order of goods within lease agreements (leasing), delivery, licensing or other methods of transfer of right to patent, copyright, trademark, other objects of the right intellectual, including industrial, property.

1.5. The accounting (tax) period - the period for which the taxpayer shall make calculations of tax and pay it to the budget.

1.6. The tax liability - the total amount of tax received (added) by the taxpayer in the accounting (tax) period, determined according to this Law.

1.7. The tax credit - the amount to which the taxpayer has the right to reduce the tax liability of the accounting period, determined according to this Law.

1.8. Budget compensation - the amount which is subject to return to the taxpayer from the budget in connection with the excessive tax discharge in the cases determined by this Law.

1.9. Collection of debt requirements - banking service on obtaining at the request of the client of means from the debtor of such client on account of repayment of its debt or the acceptance on bills of exchange, checks, other settlement and commodity documents.

1.10. Factoring - transaction on assignment the first creditor of rights to claim of debt of the third party to the second creditor with preliminary or subsequent compensation of cost of such debt to the first creditor.

1.11. The cash method - the tax accounting method by which date of emergence of the tax liabilities is determined as date of transfer (obtaining) of funds for the bank account (in cash desk) the taxpayer or the date of receipt of other types of compensations of cost delivered (or subject to delivery) it goods (services), and date of emergence of the right to the tax credit is determined as date of write-off of funds from the bank account (issue from cash desk) the taxpayer or date of provision of other types of compensations of cost delivered (or subject to delivery) to it goods (services).

1.12. Duty-free shop (duty-free shop) Item of retail trade by goods (the accompanying services) which are under customs regime according to which goods (the accompanying services) which are not intended for consumption on customs area of Ukraine are imported, are and delivered under customs control at check points on customs border, open for the international message, other customs control zones determined by customs authorities of Ukraine without collection of import customs duty, this tax, and also other taxes and fees which taxation basis is the cost of such goods (the accompanying services), measures of non-tariff regulation and licensing of activities for retail trade by the goods (accompanying such sale by services), including excisable.

1.14. The accompanying services - services which cost joins according to regulations of the customs legislation in customs value of goods which are exported or imported.

1.15. Other terms are used in the values determined by the laws by the tax matters or other laws in the part which is not contradicting this Law and other laws on the tax matters.

1.16. The tax anticipation bill is commitment unconditional monetary commitment of the taxpayer to pay to the budget the corresponding amount of means according to the procedure and the terms determined by this Law, confirmed with commercial banks by the aval which is issued by the payer on the tax deferral on value added levied in case of commodity import on customs area of Ukraine.

The protest of the tax anticipation bill is not performed, the amount specified in the outstanding bill of exchange is considered as tax debt which is repaid according to the procedure, stipulated by the legislation for repayment of tax debt.

1.17. Corporate laws, the connected person, resident, the nonresident, goodwill, money, securities, derivatives, goods, dividends, royalty percent, the credit, deposits, leasing (lease), barter, free of charge received goods (works, services), the gross expenses of production (address), fixed assets and intangible assets which are subject to depreciation are understood in the value determined by the Law of Ukraine "About the taxation of profit of the companies".

1.18. The regular prices are understood and applied by rules, certain Item 1.20 of article 1 of the Law of Ukraine "About the taxation of profit of the companies".

1.19. Service in international delivery - service in transportation of passengers, their baggage, loads and the international departures by any vehicle if such transportation is performed on the territories of two or more countries and at the same time the point of departure or destination, or that and that are in the territory of Ukraine. At the same time for the purpose of the taxation the resident status of agreement parties about such transportations is not taken into account.

1.20. Service in international delivery of passengers and their baggage road transport - transport services of the payer of this tax in transportation of passengers and their baggage for remuneration or it is free if regulations of the Convention on the agreement of the international motor transportation of passengers and baggage of March 1, 1973 are applied to such agreement on transportation.

1.21. Service in international delivery of loads road transport - transport services of the payer of this tax in transportation of goods by vehicles for remuneration if specified in the agreement the place of cargo reception for transportation and the place provided for its delivery are in the different countries from which one is Ukraine, and are applied regulations of the Convention on the agreement of the international motor transportation of loads of May 19, 1956 to such agreement on transportation.

1.22. Continuous (indivisible) service in international delivery of passengers, baggage, loads and the international departures - service in transportation (delivery) of passengers, their baggage, loads and the international departures from the point of departure (acceptance of load or the international departure for transportation) in the territory of Ukraine to Item of customs clearance, from Item of customs clearance to destination (delivery) outside frontier of Ukraine and/or between Items outside customs border of Ukraine, and also from the point of departure (acceptance of load or the international departure for transportation) outside the territory of Ukraine to Item of customs clearance within frontier of Ukraine, from Item of customs clearance to destination (delivery) within customs border of Ukraine.

If the taxpayer provides continuous (indivisible) service in international delivery by road transport of passengers, their baggage or loads, then for the purposes of the taxation the cost of such service shares in proportion to transportation pieces concerning which different rates of taxation by this tax or releases from the taxation are established.

1.23. The international express departure (further - the international departure) - properly packed goods and other objects which move (are sent) by express carrier any kind of transport through customs border of Ukraine for the purpose of delivery to the receiver to the time stipulated by the parties. The customs and tax modes of the international express departure are identical to the customs and tax modes of the international mailing.

1.24. The international mailing (further - the international departure) - goods and other objects which are classified such according to the Law of Ukraine "About procedure for import (peresylaniye) to Ukraine of customs clearance and the taxation of personal belongings, goods and vehicles which are imported (are sent) by citizens on customs area of Ukraine", including by rules of Universal Postal Union.

1.25. The vehicle - the land, underground, water, underwater, air and space motorized means intended for transportation of passengers and their baggage, loads and the international departures.

1.26. Repair - transactions on provision of services on remedial action of goods, their reduction in the working condition, to recovery of resource or their characteristics.

The repair falling under determination of Item 42 of Article 1 of the Customs code of Ukraine is considered international.

Article 2. Taxpayers

Taxpayer is:

2.1. Any person, which:

a) performs or plans to perform economic activity and is registered according to the voluntary decision as the payer of this tax;

b) is subject to obligatory registration as the payer of this tax;

c) imports goods (the accompanying services) in amounts, taxable this tax according to regulations of this Article.

2.2. Any person who according to the voluntary decision was registered by the taxpayer.

2.3. Person is subject to obligatory registration as the taxpayer in case:

2.3.1. When total amount from implementation of transactions on delivery of goods (services), including with use of local or global computer network, taxable according to this Law, added (paid, provided) to such person or on account of obligations to the third parties, during the last twelve calendar months in total exceeds 300 000 hryvnias (excluding tax on value added).

2.3.2. Person, authorized to bring the consolidated tax on the taxation objects resulting from delivery of services to the companies of rail transport for their main activities and the telecommunications agencies which are under the supervision of the taxpayer, according to the procedure, established by the Cabinet of Ministers of Ukraine.

2.3.3. Person delivering goods (services) on customs area of Ukraine with use global or local computer networks at the same time nonresident person can perform such activities only through the permanent mission registered in the territory of Ukraine.

2.3.4. Person performing transactions on realization of condemned property irrespective of whether it reaches the total amount of transactions on the delivery of goods (services) determined by subitem 2.3.1 of Item 2.3 of this Article or is not present and also irrespective of the fact which the tax regime uses such person according to the legislation.

2.4. Any person importing (for physical persons - importing (sending) goods (the accompanying services) on customs area of Ukraine for their use or consumption on customs area of Ukraine irrespective of the fact which it uses tax regime according to the legislation, except for the physical persons which are not registered by taxpayers who import are (sent) by goods (objects) in accompanying baggage or receive them as the mailing within uncommercial turnover in amounts, non-taxable according to the customs legislation (except import of vehicles or spare parts to them such physical persons) and nonresidents who send mailings it agrees with rules of the International postal union to customs area of Ukraine, and receivers of such mailings.

In case of import (transfer) of goods (objects) by the physical persons which are not registered as payers of this tax in the amounts exceeding uncommercial turnover, taxable such persons pay the value added tax when crossing by such goods (objects) of customs border of Ukraine without registration proceeding from customs value of goods (objects) exceeding the size of uncommercial turnover.

Article 3. The taxation object and transactions which are not the taxation object

3.1. The taxation object are transactions of taxpayers on:

3.1.1. deliveries of goods and services which place of delivery is on customs area of Ukraine, including transaction on:

to transfer of property on subject to pledge to the borrower (creditor) for debt repayment of the pledger;

to transfer of object of financial leasing to the order of the leasing recipient;

to delivery of international shipping services of passengers, baggage and loads road transport, and also the international departures by any kind of transport on piece from Item of their departure (acceptance for transportation) on customs area of Ukraine in Item of their customs clearance, and also from Item of their customs clearance to destination (delivery) on customs area of Ukraine;

to delivery of international shipping services of passengers, baggage and loads (except the international departures) any kind of transport (except automobile) on piece from Item of their departure (acceptance for transportation) on customs area of Ukraine to Item of conducting border control from their release out of limits of frontier of Ukraine, and also from Item of border control on their admission in limit of frontier of Ukraine to Item of their appointment (delivery) on customs area of Ukraine;

in other cases determined by this Law;

3.1.2. commodity importation (the accompanying services) in customs regime of import or reimport (further - import) according to Chapters 29the provisions -30 of the Customs code of Ukraine.

For the purpose of taxation this tax to import also equates transactions on import to customs area of Ukraine:

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