Automatic VAT refund: conditions (part 2)

A taxpayer should meet a number of criteria in equal measure to get the right to receive automatic VAT refund budget (see the beginning in part 1):

4) the total amount of the differences between the tax credit, which is formed by the taxpayer for purchased goods/services and tax liabilities of its counterparties in the supply of such goods/services that occurred during the three previous sequential calendar months does not exceed 10 percent of the budget refund amount claimed by the taxpayer.

The data recorded in the appendixes to the VAT tax accounting (declarations and/or adjusted calculation) by the taxpayer are used to form this criterion: interpretation of the tax liability and the tax credit in terms of counterparties, calculation of the adjustment VAT amounts to the tax declaration on VAT.

The procedure of calculation:

divergence coefficient (Dc) as the ratio of the total divergence amount between the tax credit, which is formed by the taxpayer for purchased goods/services and tax liabilities of its counterparts in the supply of such goods / services to the VAT amounts declared by the taxpayer to the refund during the current accounting period is defined by the formula

where СР is the divergence between the tax credit, which is formed by a taxpayer for purchased goods/services and tax liabilities of the counterparts in the supply of such goods services at the first day of the month following the accounting period, that occurred during the three previous sequential calendar months;

С is the VAT amounts declared by the taxpayer to the refund during the current accounting period.

Index (Dc) must not be in excess of 10 percent of tax amount declared by the taxpayer to the refund;

5) taxpayers whose employees have an average wage not less than two and a half times are in excess of minimum level established by the legislation in each of the last 4 tax accounting periods (quarters).

The data of taxpayer tax calculation of 1ДФ form “Calculation of income tax charged (paid) for the benefit of taxpayers and amounts of tax withheld“ by each of the last 4 sequential accounting tax period (quarter) which deadline has expired for filing tax returns are used to form stated criteria.

The procedure of calculation for each of the accounting fiscal periods (quarters):

for the ratio calculation of the employee average wages to the minimum wage established by the State Budget of Ukraine (SC), the data of 1 ДФ form are used “Calculation of income tax charged (paid) for the benefit of taxpayers and amounts of tax withheld “due to the total amount paid for the corresponding period of income to employees in the form of wages and number of employees who received such income;

the average wage of the employee (AW)  in each accounting tax period (quarter) is determined  by the formula

where TA is total amount of refunds to employees in the form of wage during the relevant accounting period (quarter);

NE – the number of employees who had refunds in the form of wages during the relevant accounting period (quarter);

3 - the number of months in the accounting tax period (quarter);

the ratio of average employee wages to the minimum wage established by the State Budget of Ukraine (SC), in each of  the last 4 sequential accounting tax period (quarter), which the deadline has expired for filing tax returns is determined by the formula

where MW  is minimum wage established by the law on the State Budget of Ukraine for the last month of the relevant accounting period (quarter).

The specified coefficient for each of the last 4 sequential tax accounting periods (quarters) should not be less than 2.5.

To be continued.