Tax & Accounting Blog

Ukraine Implements New 7% VAT Rate

Blog, Indirect Tax, ONESOURCE July 3, 2014

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A new VAT rate was introduced in Ukraine with an act named “On Prevention of Financial Disaster and Creation of Grounds for Economic Growth in Ukraine”, No. 1166-VII, dated March 27, 2014. The new 7% rate is applied to pharmaceuticals and medical equipment, which were previously exempt from VAT. Due to certain ambiguities in the wording of the act, Ukraine’s legislature passed “On Amendments to the Tax Code of Ukraine and some other legislative acts of Ukraine to address some inconsistencies” on April 10, 2014. Among the issues clarified by the second act, is that the new reduced VAT rate applies to “operations of entry into the customs territory of Ukraine and supply into the customs territory of Ukraine”. The new rate was effective April 1, 2014.

The new rate is currently supported by Thomson Reuters’ Global Indirect Tax Determination.