The legal regime of martial law dictates more and more new conditions for doing business, and therefore for filling out tax returns. Every day, individual business representatives are faced with the destruction or damage of their goods and material values or the destruction of real estate in general. Along with this, it is impossible to sell the destroyed goods, which means to get income. In addition, what to do with the tax credit received from transactions of acquisition of material values? Let’s understand this issue in more detail.
Goods purchased in transactions subject to value added tax, destroyed or lost as a result of force majeure during the period of martial law are not considered to be used by the taxpayer in non-VAT transactions or transactions that are not the taxpayer’s business. Such a rule is provided by clause 32-1 of subsection 2 of the transitional provisions of the Tax Code of Ukraine.
The existence of circumstances of force majeure (force majeure) was certified by the Chamber of Commerce and Industry on February 28, 2022 and does not require additional confirmation. Therefore, this rule applies from February 24, 2022 until the end of the legal regime of martial law.
Along with this, the existence of such a norm can also give rise to cases of abuse by unscrupulous taxpayers. In order to avoid situations of selling goods for cash and leaving a tax credit on your account, it is imperative to record the fact of such destruction or damage.
Fixation of the fact and extent of property damage or destruction can be carried out using the following mechanisms:
- Creation of a working group for the enterprise (commission), which will describe the scale of losses;
- Carrying out inventory with the help of third-party specialists;
- Involvement of representatives of the State Emergency Service, the National Police for the purpose of additional recording of losses;
- Appeal to local self-government bodies (military administrations) to ascertain the fact of destruction of property as a result of military actions;
- Photo and video shooting.
All collected materials must be kept for a minimum of 3 years from the moment of the end of martial law, as issues of legality and correctness of determining the loss of material values may arise during the appointment and inspection by the DPS authorities.
If the objects of movable and immovable property were damaged, we recommend involving property valuation experts. It is they who can calculate the actual losses with their conclusion.
It is worth remembering that the more and better the documents are collected at the current stage, the stronger the position will be in the event of a possible appeal of the results of the inspection by the tax authorities.
If you have any questions or new ones, contact the lawyers and accountants of the Prikhodko&Partners legal company. We know and will find answers to all your questions, and therefore we will be able to solve all problems.