Value Added Tax (VAT) was introduced into Ukraine in 1993. Since January 1, 2011 it has been administrated by the Ukrainian State Tax Administration in accordance with Chapter I and Chapter V of the Tax Code of Ukraine

Mandatory registration: a legal entity must be registered as a VAT payer if the aggregate amount from transactions relating to supply of goods/services, which are subject to VAT, accrued (paid) to such entity during the last 12 calendar months exceeds UAH 300,000 (excluding the value added tax);

Voluntary registration: a legal entity may opt for registration as a VAT payer if at least 50% of the goods or services produced are supplied to counter parties that are VAT payers.

There is no mechanism for foreign entities to be registered as VAT payers. Therefore, it is not possible for foreign entities to recover any input VAT, except, however, the case when a foreign company works in Ukraine through its permanent establishment registered as VAT payer herein.

To recover VAT in Ukraine, all VATable transactions must be properly documented with VAT invoices. There is an explicit list of items to be indicated in a tax invoice. Input VAT invoices are valid for offset within 365 calendar days from the date of issuance.

There is an obligatory registration of tax invoices in the Unified Register of Tax Invoices for sellers if the amount of VAT in a tax invoice exceeds:

• UAH 1,000,000 – from 1 January 2011;
• UAH 500,000 – from 1 April 2011;
• UAH 100,000 – from 1 July 2011;
• UAH 10,000 – from 1 January 2012.

If a company provides only VAT-exempt services, any input VAT can not be recovered, but treated as an expense for CPT purposes. If a company provides both VAT-exempt and VATable services, input VAT can be refunded pro rata.

VAT payers that meet the criteria established by the tax law may be entitled to automatic cash VAT refunds (i.e. based on results of an office audit).

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