Recently adopted changes of VAT regime of services

On May 19, 2011 Ukrainian Parliament (Verkhovna Rada) adopted changes to the Tax Code of Ukraine Re: VAT regime of specific services.

In the nearest future, services indicated in Subclause ‘v’ Clause 186.3 of the Tax Code will become subject to VAT. 

Therefore the following services will become VAT-able:

- Consulting services;

- Engineering services;

- Audit services;

- Legal services;

- Software development services;

- Any other IT services (data processing, databases, IT maintenance and consulting etc.).

However, as before the adoption of the Tax Code, the abovementioned services are considered to be supplied at the customers’ premises (not the contractor’s premises). Therefore the place of supply of such services is outside of the customs territory of Ukraine if they are provided by Ukrainian contractor to the non-resident of Ukraine.

As a brief summary please note, that abovementioned services shall be taxed with VAT if both contractor and customer is residents to Ukraine. The services will be subject to reverse charge VAT in Ukraine if they are provided by non-resident contractor to Ukrainian customer. At the same time, the services are not subject to Ukrainian VAT if they are provided by Ukrainian contractor to the non-resident of Ukraine.




Mykola Khomenko ©