Ukraine. Reduction of the VAT rate Applicable to Import of Medicines and Medical Products

On 19 April 2014 Law of Ukraine No.1200-VII “On amendments to the Tax Code of Ukraine and other Legislative Acts of Ukraine caused by Inconformity of Legislative Provisions” dated 10 April 2014 (“Law No.1200-VII”) came into force.

Law No.1200-VII specifies that VAT at the rate of 7% should apply to supply within and import to the territory of Ukraine of:

• medicines which are allowed for manufacturing and use in Ukraine and included into the State Registrar of Medicines, and medical products included into the list approved by the Cabinet of Ministers of Ukraine (the “CMU”);
• medicines, medical products and/or medical equipment which may be used in clinical trials, which were allowed to be carried on in Ukraine by the state healthcare authority.

The final provisions of Law No.1200-VII establish that from 1 April 2014 till 1 June 2014 VAT payers who charge 7% VAT in respect of the supply of medicines and medical products are not obliged to reflect the following information in sales receipts:

• the code of the VAT rate for a product unit;
• the aggregate amount of VAT for every position (group of goods);
• the total fees, including VAT, due by a customer.

Earlier this month Law of Ukraine No.1166-VII effective from 1 April 2014 abolished the VAT exemption and introduced 7% VAT in respect of supply of medicines and medical products within the territory of Ukraine.

However, as a result of inaccurate wording of Law No. 1166-VII, importation of medicines and medical products was subject to 20% VAT from 1 till 19 April 2014.

Source: KPMG-Ukraine