State Fiscal Service on VAT Charging during Damaged Products Disposal

State Fiscal Service explained in its letter № 22542/6/99-99-19-03-02-15the procedures of VAT charging during the damaged products disposal.

Fiscal Service reminded that in accordance with paragraph 185.1 article 185 of the Tax Code of Ukraine the tax payers’ operations on goods/services supply to the tax territory of Ukraine (article 186 of the Tax Code) are subject to VAT.

State Fiscal Service made it clear that the cost of unsuitable for selling and submitted for reprocessing goods shall be included into the cost of new products increasing VAT charges accordingly. The increased VAT charges are compensated by consumers buying the products. The goods submitted for reprocessing are considered as those used in business activity.

Nevertheless, the tax payer’s submission of unsuitable for further selling goods for reprocessing aimed at VAT charging shall not be considered as separate goods supply operation and shall not be subject to VAT.