The State Tax Service of Ukraine (STS) has reminded taxpayers of the possibility of exemption from value-added tax (VAT) liabilities in the event of the destruction or loss of goods due to force majeure during a state of war or a state of emergency.
The agency’s website states that, pursuant to paragraph 32¹ of Subsection 2 of Section XX of the Tax Code of Ukraine (TCU), goods purchased by a taxpayer for use in taxable transactions but lost as a result of force majeure are not considered to have been used in non-taxable transactions or outside of business activities. In such cases, the taxpayer is not required to accrue VAT liabilities under paragraph 198.5 of Article 198 of the Tax Code.
At the same time, the service emphasized that this provision may be invoked only if there is proper documentary evidence. To this end, the taxpayer must have source documents confirming the destruction or loss of the goods, as well as a certificate of force majeure issued by the Ukrainian Chamber of Commerce and Industry (UCCI) or an authorized regional chamber of commerce and industry within seven days of the date of application. The existence of such a certificate is a mandatory condition for applying the exemption.
In addition, the State Tax Service noted that VAT amounts included in the tax credit upon the purchase of property that was subsequently destroyed are not included in the calculation of the budget refund. They are carried forward to the tax credit for the next reporting period until they are fully offset.
Sources: https://tax.gov.ua/media-tsentr/novini/1038742.html
