The Ministry of Finance appeals to the members of the Parliament to vote for the draft law No. 7518. This draft law settles the modalities of VAT refund to business under applications which were submitted by taxpayers before February 1, 2016, were approved by courts but not included in the Temporary VAT Refund Register.
Over the last year and a half, the Ministry of Finance, the Government, the President and the Parliament have done a lot to establish timely and transparent VAT refund for business. Now, almost every meeting between representatives of business and the Government starts with appreciation expressed by those who at last can expect timely and regular VAT refund. It became possible thanks to the joint efforts of all involved parties.
However, not all problems could be cleared – the state has “old debts” to business regarding VAT refund according to applications submitted before February 1, 2016, i.e. prior to the launch of the public VAT refund registers.
What amount is at stake? As of today, the agreed amount which is to be refunded to business is equal to UAH 676.2 million (according to 498 applications). This proven amount the state shall re-pay to business. Further almost UAH 4 billion are now under dispute (1,268 applications submitted before February 1, 2016).
In the end of 2016, the law No. 1797 on the improvement of the investment climate in Ukraine was adopted which was to settle the situation. However, this law could not settle the old debts due to some discrepancies. At the same time, its implementation helped identify additional changes required in the Tax Code to finally return the due debts to business.
A draft law containing such amendments was elaborated by the Ministry of Finance jointly with representatives of business and experts; it was approved by the Government and registered at the Parliament under No. 7518.
This draft law aims to rectify problems which affect the rights and legal interests of taxpayers who are still waiting for VAT refund according to their applications submitted before February 1, 2016, which were approved by courts.
The Ministry of Finance expects a fruitful cooperation with the members of Parliament and relies on their support for the draft law No. 7518 which restores justice in regard to VAT refund. The position of the Government on this issue was backed by President P. Poroshenko, since this draft law is crucial for businesses which work, invest and create jobs in Ukraine.
Also, the Ministry of Finance stresses it is unacceptable to push one’s own political ambitions contradicting the interests of taxpayers.
According to the current Tax Code of Ukraine, the State Fiscal Service prepared a temporary register of VAT refund applications submitted before February 1, 2016 and published it on its official website. This register lists applications which were not refunded as per January 1, 2017. The total volume of the applications in the temporary register is equal UAH 219.1 million (193 applications).
However, after the temporary register had been published, court decisions entered into force granting VAT refund under applications which were rejected by the State Fiscal Service as per January 1, 2017 and were not included into the temporary register.
The draft law No. 7518 establishes a procedure for capturing these refund applications approved after January 1, 2017 in the temporary register.
Also, the draft law No. 7518 clarifies paragraph 56 of sub-section 2 of chapter XX “Transitional Provisions” of the Tax Code regarding the procedure for the VAT refund from the state budget according to the applications included in the temporary register. Thus, the current edition of the Tax Code mentions “the distribution of the VAT refund amounts stipulated by the law on the state budget for the respective year”. This formulation is against the budgetary principle according to which VAT revenues in the state budget are calculated in line with the saldo method (revenues deducted by refund) and the refund amount is not shown as a separate line.
The draft law No. 7518 proposed by the Ministry of Finance sets a transparent and clear procedure for VAT refund according to the applications captured in the temporary register which must take place within five operation days after the inclusion of the agreed amount in the register.