Being adopted on April, 10, 2014, by the Verkhovna Rada of Ukraine the Law of Ukraine ‘On Introduction of Amendments to the Tax Code of Ukraine and Some Other Legal Acts of Ukraine in Terms of Resolving Particular Inconsistencies of Legal Norms’ was today published in the official printed edition of the Verkhovna Rada of Ukraine– 'Holos Ukrainy' newspaper ('The Voice of Ukraine') (issue# 77).
According to the text of final provisions of the law, the law shall come into effect as of the day that follows the day of its official publication, i.e. as of April, 19, 2014. In the territory of Ukraine 7% VAT will be applied in the operations of supply and delivery to the customs territory of Ukraine related to the medications that are permitted for production and usage in the territory of Ukraine and recorded into the State Registry of Medications as well as the medications as per the list approved by the Cabinet of Ministers of Ukraine.
We would like to reiterate that in the panel meeting held on April, 9, 2014, the Prime Minister of Ukraine A. Yatsenyuk enounced that the Government had adopted the ordinance to approve the list of medications that are subject to 7% VAT. However, no information as regards to publication of the present ordinance is yet available in the Government’s official web-site.
Besides, 7% VAT will be applied in case of supply and delivery operations into the customs territory of Ukraine related to medications, medical substances and/or medical equipment permitted for usage within the framework of clinical trials that are permitted by the central executive body that ensures state policymaking in the field of health protection.
The law shall also envisage that as of April,1, 2014, and subsequently 2 months alongside payers of 7% VAT on supply operations related to medications and other medical substances shall not be subject to the requirements of normative and legal acts in terms of reflection of records in cash receipts.
Therefore, this entails that for the drugstores ‘the transition period' shall be introduced to bring clearing settlements in line with the requirements of the Law of Ukraine ‘On Preventing Financial Catastrophe and Creating of Prerequisites for Economic Growth in Ukraine’.
We would like to note that the commentary that we developed to the Law (yet at project stage) was ignored by the legislator. That covers the terminology that brings about collision and particular aspects that were ignored by elaboration of the Law.
Therefore, today the issues below need to be resolved de jure:
- missing list of medications that are subject to 7% VAT that entails, before approval of the list, application of 20%VAT to all medications (during three months as of the day of effect of the present Law);
- underdeveloped state regulation of prices on medications and medical substances in terms of maximum permissible supply -sale premiums and sales (retail) markups including the cases when they are in full or in part purchased at the cost of state and local budgets;
- missing reporting form of VAT invoice for 7%.VAT.
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