VAT refund for agricultural enterprises

Value-added tax reimbursement is one of the most important tools for supporting business liquidity in the agricultural sector. Let's take a closer look at how this works in practice, as well as how the legal services of the tax specialists at "Prikhodko&Partners" can help.

Grounds for VAT refunds in the agricultural sector. Formula for determining a negative value

The specific nature of agricultural activity, including seasonal production and significant export volumes, often leads to situations where the tax credit amount exceeds the tax liability. The main basis for claiming budgetary compensation is the presence of a negative value that arises as a result of economic activity.

This right is enshrined in the Tax Code of Ukraine and applies to those taxpayers who have actually paid taxes to suppliers of goods or services. The mechanism for determining the amount eligible for a refund is based on a clear mathematical relationship. The calculation uses a negative value, calculated as the difference between the tax liability for the reporting period and the tax credit for the same period. The formula is: A = TL – TC, where A is the amount of the negative value, TL reflects the accrued tax liability, and TC represents the total confirmed tax credit. If the result is negative, the taxpayer has the right to apply this amount toward reducing the tax debt or to receive the funds into an account.

The procedure for filing a claim for reimbursement

The refund application process begins with the correct completion of the tax return for the reporting period. Farmers must clearly indicate the amount of the negative value in the appropriate line of the return and simultaneously submit a special attachment containing a request for a refund of the budgetary refund.

This request specifies the method of receiving the funds. Typically, this is a bank transfer to the company's current account. An important condition is that the amount requested by the taxpayer must not exceed the registration limit in the electronic VAT administration system at the time of filing.

After registering the return in the regulatory authority's database, the information is automatically entered into the Registry of budgetary refund applications. This registry is public, allowing businesses to track the status of their application in real time.

Tax audit procedure. Stages and timelines

The next critical step is a State Tax Service audit to confirm the validity of the amounts declared. The process begins with a desk audit, which is conducted automatically without on-site visits to the taxpayer. It is aimed at identifying arithmetic or methodological errors in the reporting. The desk audit period is 20 calendar days following the tax return filing deadline.

If risks exist or the amount of compensation is significant, the tax authority has the right to initiate a documentary audit. This documentary audit can be either on-site or off-site. During this stage, inspectors analyze primary documentation, contracts with counterparties, warehouse documents, and proof of receipt of goods or services. The audit typically takes 30 calendar days. The state carefully examines the authenticity of business transactions, particularly when purchasing fuel and lubricants, fertilizers, and equipment, to rule out fraudulent lending schemes.

Recording the inspection results

Recording the audit results officially concludes the control measures. If the desk audit reveals no violations, the amount is automatically considered approved.

During a documentary audit, a report is drawn up recording all identified deviations from legal norms. If no violations are found, a certificate is issued confirming the taxpayer's right to a refund. Based on these documents, the tax authority sends a conclusion to the Treasury, and the funds are to be transferred to the farmer's account.

However, situations often arise where tax authorities raise claims regarding the "bad faith" of counterparties or the "unrealistic" nature of transactions. This results in the issuance of a tax notice decision (TND) denying a refund or imposing penalties.

Legal assistance in appealing the results of an inspection in administrative and judicial proceedings

In situations where an agricultural enterprise faces an unjustified refusal, legal assistance becomes critical. The tax lawyers at "Prikhodko&Partners" can assist in the following ways:

• file a complaint with the highest-level regulatory authority, providing a detailed justification for the taxpayer's position and additional evidence;
• if the administrative appeal does not produce the desired result, appeal to the administrative court.

A specialist develops a representation strategy, gathers evidence, prepares a statement of claim, and represents the agricultural producer in court. Judicial practice in Ukraine often favors the taxpayer if the company can prove the actual movement of assets and proper documentation.

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