On February 24, amendments to the TCU were published regarding the application of a reduced VAT rate in the amount of 14% for import and domestic supply of certain types of agricultural goods, that will be applied from March 1, 2021.
1. The reduced rate will be applied to the following types of agricultural goods (hereinafter – “Goods”):
- Animal products: cattle, pigs, sheep (except for import of purebred breeding animals, breeding genetic resources by farmers that are exempt from VAT), whole milk.
- Plant products: wheat and a mixture of wheat and rye, rye, barley, oats, corn, soybeans, flax seeds, canola, rape, sunflower, seeds and fruits of other oilseeds (crushed, uncrushed), sugar beets.
2. During the transitional period VAT rate of 20% shall be applied to the above-mentioned products for the following transactions:
- Supply of goods on the territory of Ukraine, for which advance payment was received from the VAT payer before March 1, 2021.
- Adjustment of VAT liabilities in case of a refund of advance payment or goods received before March 1, 2021.
- Adjustment of VAT liabilities in case of changing the contractual value of goods delivered before March 1, 2021.
3. VAT credit formed from the purchases of goods before March 1, 2021, at the rate of 20% shall be retained in full and shall not be subject to adjustment for the subsequent supply of such goods at the rate of 14%.
4. The transitional provisions do not disclose in detail the application of rates of 20% or 14%, which may be the subject of attention of the tax authorities, in the following cases:
- The first event that took place before March 1, 2021 was supply of goods.
- The first event that took place before March 1, 2021 was the receipt of advance payment from a non-VAT payer.
- Part of the goods that were not covered by the received advance payment is delivered after March 1, 2021.