EDGE Magazine | Q3 2011


A


s officially published June 17th,


the VAT exemptions on consulting, engineering, auditing, IT and other similar services have been cancelled effective July 1st according to the recently adopted law in Ukraine.


VAT exemptions permitted under the January 1st Tax Code were considered very generous and somewhat of a surprise by the Professional and Business community, however the tax provisions brought about some confusion and many questions by both service providers as well as customers whether or not a certain type of service qualified for this special tax exemption.


It is believed that the cancellation of the VAT tax exemptions would alleviate these questions, thus


reducing tension for both the Tax Authority and the taxpayers who were confused by the previous tax provision.


The new law effective July 1st will influence the taxation of consulting services for engineering, auditing, Information Technology, etc… the following ways:


• Supply of such services to local customers will be apply to 20%VAT • Supply of such services to non- resident still will not be subject to VAT due to definition of place of supply for such kind of services (but no input VAT relevant to the services is allowed if such exemption is applied) • Supply of such services by non- residents will be subject to 20% VAT under the reverse-charge procedure


The service providers who used the 10


privilege before July 1 would wonder whether they are entitled to a refund of their VAT input related to their non- current assets which they were not allowed to credit in the previous period under the exemption. Because neither Tax Code nor the new law addressed the change do not contain this possibility, most taxpayers will look for direction from the Tax Authority regarding this matter relying on its good faith, as otherwise the service providers would appear to be unfairly penalized through no fault of their own as a result of the law makers who did not envision such logic provision in the Law.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38