Automatic VAT refund: conditions (part 1)

Automatic and just-in-time value added tax refund is a dream of each business enterprise. It is possible but under certain conditions – the so called criteria which are needed to have a right for receiving automatic budget refund. What are they?

By the Order of the Ministry of Revenue and Duties of Ukraine of 10/12/2013  № 781 was approved “The Procedure for determination of compliance of the taxpayer with criteria that enable to get automatic budget refund of value added tax“, developed according to paragraphs 200.18 - 200.21 of Article 200 of Chapter V of the Tax Code of Ukraine.

The taxpayer ought to meet numbers of criteria to receive a right getting automatic budget refund of value added tax.

The data, on which the criteria and the procedure of their calculations are based:

1) Taxpayers who are not in legal bankruptcy proceedings in accordance with the Law of Ukraine Закону України 'On Renewal Debtor's Solvency or Declaring it as a Bankrupt'.

The information of the Single State Register of legal entities and individual entrepreneurs is used to form mentioned criterion, information which is included in the Unified database of taxpayers – legal entities is based on the court decisions and announcements of bankruptcy;

2) Concerning taxpayers who are included in the Unified State Register of legal entities and individuals – entrepreneurs  there are no any records in the register on:

• absence of information confirmations;
• absence at the location (residence);
• making decisions on separation, dissolution of legal entities, business of individual – entrepreneur;
• recognition of whole or partly void constituent documents or amendments to the constituent documents of legal entity;
• termination of registration of the legal entity or business of individual - entrepreneur and concerning such people are no any solution or information, based on which the state registration of the termination of a legal entity or business of individual entrepreneur are conducted.

The information of  the Single State Register of legal entities and individual entrepreneurs is used to form mentioned criterion according to the Law of Ukraine Закону України 'On state registration of legal entities and individuals – entrepreneurs”;

3)  Taxpayers carrying out transactions with a zero rate ( relative share of which over previous twelve consecutive tax reporting periods (months) in common is not less than 40 percent of total shipments (for taxpayers with a quarterly reporting period - over previous four consecutive tax reporting periods).

The Information of tax returns on VAT of  the taxpayer (VAT returns for payments to the budget as well as VAT returns of legal entity that has special tax regimes) over previous twelve consecutive tax reporting periods (months)/ over previous four consecutive tax reporting periods(quarters ) and refined calculation on VAT (VAT returns for payments to the budget as well as VAT returns of legal entity that has special tax regimes) is used to form mentioned criterion in respect of individual error correcting of the reporting periods.

Payment procedure:

score of supply coefficient ( SSC ) is defined as the ratio of score of supply (excluding VAT) on transactions that are taxed at a zero rate ) over previous twelve consecutive tax reporting periods (months)/ over previous four consecutive tax reporting periods(quarters ) to the total score of taxable supplies (excluding VAT ) over previous twelve consecutive tax reporting periods (months)/ over previous four consecutive tax reporting periods(quarters )by the formula:

where SS 0% - score of supply amount ( excluding VAT) on transactions that are taxed at a zero rate over previous twelve consecutive tax reporting periods (months)/ over previous four consecutive tax reporting periods(quarters ) ;

SS - total volume of supplies (excluding VAT) on transactions that are taxed at the basic rate over previous twelve consecutive tax reporting periods (months)/ over previous four consecutive tax reporting periods(quarters).

Figure(SSC) should not be less than 40 percent.

To be continued.