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VAT taxation of transactions for the supply of medical devices

VAT taxation of transactions for the supply of medical devices

Regarding the temporary exemption from VAT of transactions for the supply and import of medicines and medical devices:

In order to implement the necessary measures aimed at preventing the occurrence and spread, localization and elimination of outbreaks, epidemics and pandemics of coronavirus disease (COVID-19), the Law on Amendments to the TCU №532-IX of 17.03.2020 was adopted. and 530-IX with changes from 18.04.2020. which established an exemption from VAT on the import and / or supply of medicines, medical devices and / or medical equipment, namely:

1. In accordance with paragraph 38-1 of subsection 2 of the XX TCU, until December 31, 2022 are exempt from VAT if the import and / or supply (transfer) of medicines, medical devices and aids to them is carried out at the expense of the state budget for the implementation of relevant agreements (contracts) concluded by the person authorized to carry out procurement in the field of health care, within the framework of implementation of programs and implementation of centralized health care measures:

  • operations on import to the customs territory of Ukraine of medicines, medical devices (for the implementation of programs at public expense);
  • operations on supply of medicines and medical devices on the customs territory of Ukraine (for the implementation of programs at public expense);
  • operations on free supply (transfer) to a person authorized to make purchases in the field of health care, medicines, medical devices;
  • operations on free supply (transfer) of medicines, medical devices;
  • operations on free supply (transfer) in the health care system to the final consumer (patient), including for the purpose of providing the necessary medical services and medicines provided by the program of medical guarantees, medicines, medical.

The list of goods that are exempt from VAT under this paragraph can be found in the Resolution of the Cabinet of Ministers of March 20, 2020 № 225 at the link: Law.

However, in case of misuse of medicines, medical devices and auxiliary means to them in accordance with this paragraph, the taxpayer is obliged to increase tax liabilities as a result of the tax period for which such violation occurs, by the amount of value added tax, which had to be paid upon import into the customs territory of Ukraine (supply in the customs territory of Ukraine) of such medicines, medical devices and auxiliary means to them, as well as to pay a fine in accordance with the law.

2. With regard to benefits for the supply of medicines, medical devices and / or medical equipment that are not carried out in the order of public procurement and other conditions of paragraph 38-1, according to paragraph 71 of subsection 2 of XX TCU, temporarily, for the period ending on the last calendar day of the month in which the quarantine established by the Cabinet of Ministers throughout Ukraine ends, transactions on import into the customs territory of Ukraine and / or operations on supply of goods (including medicines, medical supplies) on the customs territory of Ukraine shall be exempt from VAT. products and / or medical equipment.

  • applied at all stages of supply of goods, regardless of the date of their production and origin;
  • applies regardless of the range of entities carrying out such transactions, their status as VAT payers, or form of ownership.

The VAT payer who supplies goods subject to the exemption does not lose the “incoming” VAT, as the provisions of paragraph 198.5 of Art. 198 and Art. 199 of the TCU do not apply, and tax liabilities are not accrued. Accordingly, such a payer retains the right to recognize a tax credit for VAT paid on imports of goods with a list determined by the Cabinet of Ministers of Ukraine, when purchasing them, or as part of goods (works, services) used in the production of these goods (for the manufacturer ).

* The provisions of this paragraph apply to transactions carried out from March 17, 2020.

With the list of medicines, medical devices and / or medical equipment that are temporarily exempt from VAT under item 71 of subsection. 2 of the XX TCU can be found in the Resolution of the Cabinet of Ministers of March 20, 2020 № 224, at the link: https://zakon.rada.gov.ua/laws/show/224-2020-p

However, it should be noted that these benefits apply only:

  • to medicinal products entered in the State Register of Medicinal Products, Medical Devices entered in the State Register of Medical Equipment and Medical Devices and / or put into circulation in accordance with the legislation in the field of technical regulation and conformity assessment, for example, to medical devices, active medical devices devices within the meaning and with the requirements established by the Technical Regulations for Medical Devices № 753, Technical Regulations for Medical Devices for In Vitro Diagnostics № 754, Technical Regulations for Active Medical Devices that are implanted № 755; personal protective equipment, within the meaning and with the requirements specified in the Technical Regulation on Personal Protective Equipment № 761 or the Technical Regulation on Medical Devices № 753.

That is, benefits apply to goods manufactured or imported / put into circulation in the customs territory of Ukraine by enterprises that have all the necessary licenses / permits / results of examinations / certificates or other permitting documents, for their further implementation. Privileges do not apply to hand-sewn masks or unregistered means.

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