Draft amendments to the procedure of VAT on baby food and goods for children

On the website of the Ministry of Economic Development and Trade of Ukraine was promulgated a draft resolution of the Cabinet of Ministers of Ukraine "Some issues of regarding implementing subparagraph 197.1.1 of paragraph 197.1 of Article 197 of the Tax Code of Ukraine" (hereinafter referred to as the “draft resolution”).

The draft resolution was prepared for fulfillment of provisions of the Tax Code of Ukraine in order to define a clear list of baby food and children’s goods for newborns, supplies of which are exempted from value added tax (hereinafter referred to as “the list”), which has not been yet approved.

It is suggested to include domestic and imported goods according to the codes of the State Classification of Goods and Services (for domestic products) and Ukrainian Classification of Goods for Foreign Economic Activity (for imported products) in the list.

It is expected that the adoption of the draft resolution will:

• Reduce the price burden on consumers interested in the mentioned list of baby food and children’s goods for newborns in Ukraine, as a result of exemption from VAT on such goods.
• Improve the demographic situation as a result of cost reduction of goods for children;
• Reduce the fiscal burden on the production of baby food and children’s goods for newborns in accordance with the list.