What Entrepreneurs Need to Know About VAT

VAT, or Value Added Tax, is a tax applied to goods, works, and services sold in the territory of Ukraine. VAT is an indirect tax, meaning it is not paid directly by the consumer but is passed along the supply chain from the manufacturer to the final consumer.

Entrepreneurs Required to Pay VAT

Entrepreneurs are required to pay VAT if they engage in transactions involving VAT-liable objects exceeding 1 million hryvnias per year.

Types of VAT

In Ukraine, the following types of VAT are in effect:

•  20% Rate - applied to most goods and services.
•  7% Rate - applied to certain goods and services specified by legislation.
• 0% Rate - applied to the export of goods and services.

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VAT Payment Procedure

Entrepreneurs subject to VAT must register as VAT payers with the tax authority. VAT is paid based on the results of a tax period, which is one calendar month.

Transactions Exempt from VAT

The following transactions are not subject to VAT:

• Transactions involving the sale of immovable property.
• Transactions involving the sale of vehicles.
• Transactions involving the provision of financial services.
• Transactions involving the provision of services in the fields of education, healthcare, culture, arts, sports, and social services.

Some Considerations for Entrepreneurs

• Entrepreneurs who are not VAT payers can choose to register voluntarily, which may be advantageous if they engage in transactions with VAT-liable objects totaling less than 1 million hryvnias per year.
• Entrepreneurs who are VAT payers can benefit from the right to deduct input VAT. Input VAT arises when purchasing goods and services for use in business activities.
• Entrepreneurs subject to VAT must maintain VAT accounting records. VAT accounting is done through tax invoices and a register of issued tax invoices.

Do You Need Assistance from Specialists for VAT?

The need for assistance from a specialist depends on an entrepreneur's time and willingness to handle VAT-related matters independently. If an entrepreneur has limited time or is not inclined to handle VAT matters independently, they can seek help from an accountant or lawyer.

For entrepreneurs engaged in complex transactions involving VAT-liable objects, the assistance of an accountant or lawyer can be valuable for correctly determining the tax base and calculating the VAT amount.

In general, the assistance of an accountant or lawyer can be beneficial for entrepreneurs who are VAT payers.

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An accountant can help with:

• VAT registration.
• VAT accounting.
• VAT amount calculation.
• VAT reporting.

A lawyer can help with:

• Explaining VAT legislation.
• Protecting the entrepreneur's rights in case of disputes with the tax authority.

The choice between using an accountant or a lawyer is individual and depends on specific circumstances. However, quality assistance from specialists is always valuable. To receive consultation from an accountant, please fill out the form below.