Law of Ukraine № 1914 amends the Tax Code of Ukraine (hereinafter – Code) in terms of the VAT taxation procedure for tobacco supply, namely: a separate procedure for determining tax base at the stage of first supply of such products by their producers and at the stage of first supply of such products by business entities related to control relations with such producers, as well as introduction of preferential VAT (exemption) at all subsequent stages of supply of such products.
Article 189 Section V of the Code was amended with Paragraph 189.18, according to which the tax base for operations with tobacco products, tobacco and industrial tobacco substitutes, liquids used in electronic cigarettes (hereinafter – tobacco products) in the customs territory of Ukraine, for which the maximum retail prices are set, is the maximum retail price for such products excluding the value added tax.
Procedure for determining the tax base established by Paragraph 189.18 is applicable exclusively to three categories of taxpayers:
- business entities – producers of tobacco products;
- business entities related to control relations with producers within meaning of the Law of Ukraine “On protection of economic competition” (hereinafter – controlled business entities). List of controlled business entities is approved by the Cabinet of Ministers of Ukraine;
- importers of tobacco products.
Business entities that carry out supply of such tobacco products, but which do not belong to the category of producers of tobacco products, nor to the category of controlled business entities (hereinafter – “Other entities”), nor to importers of such products, do not apply rules for determining the tax base established by Paragraph 189.18 Article 189 of the Code.
Tax exemption regime, from 01.01.2022 established by Paragraph 197.27 Article 197 of the Code, is applicable to supply of tobacco products carried out by such “Other business entities”, regardless of the purchase date of such products.
Given above specified, the State Tax Service of Ukraine emphasizes the need from 01.01.2022 to ensure compliance of “Other business entities” registered as the VAT payers with requirements for reflection of requisites (during the sale of tobacco products) in settlement documents (RRO / PRRO checks), according to Regulations on the form and content of settlement documents / electronic settlement documents, approved by Order of the Ministry of Finance of Ukraine as of 21.01.2016 № 13, in particular:
name (title) of products (services), value, lettering of the VAT rate (separate for products exempted from taxation and separate for products subject to the VAT) (line 10);
lettering designation of the VAT rate on a separate line, amount of the VAT rate as a percentage, total amount of the VAT on all products subject to the VAT in a check, capital letters “VAT” must be printed at the beginning of line (line 21).