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LETTER OF STATE TAX ADMINISTRATION OF UKRAINE

of August 29, 2011 No. 23179/7/15-3417-08

About the taxation of delivery of grain and commercial crops

The State Tax Administration of Ukraine considered the letter concerning application of separate regulations of the Tax code of Ukraine and reports.

Since 01.01.2011 according to Item 15 of subsection 2 of the Section XX of the Tax code of Ukraine (further - the Code) it is temporary, till January 1, 2014, the regime of release from the taxation by the value added tax for transactions on delivery of grain crops of goods items 1001 - 1008 is introduced (except goods item 1006 and commodity subcategory 1008 10 00th 00), commercial crops of goods items 1205 and 1206, except their first delivery by agricultural predpriyatiyamiproizvoditel of the specified goods, including for transaction on import of such goods.

The law of Ukraine of 07.07.2011 No. 3609-VI "About introduction of amendments to the Tax Code of Ukraine and some other legal acts of Ukraine concerning enhancement of separate regulations of the Tax code of Ukraine" (further - the Law No. 3609) changes are made to Item 15 of subsection 2 of the Section XX of the Code.

Since 06.08.2011 according to Item 15 of subsection 2 of the Section XX of the Code temporarily, till 01.01.2014, from the taxation the value added tax exempts transactions on delivery on customs area of Ukraine of grain crops of goods items 1001 - 1008 according to UKTVED and commercial crops of goods items of 1205 and 1206 according to UKTVED, except the first delivery of such grain and commercial crops by agricultural enterprises - producers and the companies which directly acquired such grain and commercial crops at agricultural enterprises - producers.

Thus, transactions on delivery of grain and commercial crops by agricultural enterprises, both before modification of Code Law No. 3609, and after modification, are assessed with tax the value added tax at the rate of 20 percent.

According to Item 209.6 of Article 209 of the Section V of the Code the company which main activities is delivery made (provided) it agricultural goods (services) on own or leased production capacities, and also on conditions to be provided in which the specific weight of cost of agricultural goods / services makes at least than 75 percent of cost of all goods / services delivered during the previous 12 consecutive accounting tax periods in total is considered agricultural.

Thus, if person who does not meet the requirements of Item 209.6 of article 209 of the Code (that is is not agricultural enterprise) performs transactions on delivery of grain and self-produced commercial crops on customs area of Ukraine, the mode of release from the taxation according to the subitem 15 of subsection 2 of the Section XX of the Code extends to such transactions on delivery.

At the same time according to Item 198.4 of Article 198 of the Section V of the Code if the taxpayer acquires (produces) goods/service and non-current assets which intend for their use in transactions which are not the taxation object or are exempted from the taxation, then the tax amounts paid (added) in connection with such acquisition (production) do not belong to the tax credit of the specified payer.

 

The first deputy of the commission chairman on carrying out reorganization of GNA of Ukraine, the vice-chairman of GNS of Ukraine O. Klimenko

 

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