2. Value Added Tax
The Law of Ukraine «0n the Value Added Tax» in the wording of April 3, 1997, No 168/97-BP with respective changes and amendments is valid as of October 1, 1997. In addition, one has to obey the President's Decree of August 7, 1998, No 857 «0n Certain Issues ofTaxation» which came into force as of October 1, 1998 (chart 2).
Permanent representative offices of non-residents are VAT payers is they: > have the volume of executed by them taxable operations on sale of goods (works, services) during any period for the last twelve calendar months amounting to 1,200 non-taxable citizens' minimum incomes. Permanent representative offices through which non-residents execute business activity in Ukraine and which are not subject to taxpayer determination in connection with volumes of taxable operations amounting to less than 1,200 non-taxable citizens' minimum incomes during any period for the last twelve calendar months, have reight to be registered as taxpayers on their own wish (hereinafter - free-will registration);
> import (send) goods to the customs territory of Ukraine or receive from non-resident goods (services) for their use or consumption on the customs territory of Ukraine, except for individuals not registered as taxpayers in case when such individuals import (send) goods (items) in amounts not subject to taxation in compliance with the legislation;
> conduct business activity on trade for cash on the customs territory of Ukraine irrespective of sales volumes;
> render services connected with transit of passengers or freghts through the customs territory of Ukraine on the customs territory of Ukraine (temporary exempted until 01.01.2001);
> render communication services and conduct consolidated account of profits and expenditures connected with rendering of such services and received (carried) by other persons subordinated to such person.
Description of terms used in the Law of Ukraine «0n Value Added Tax», including non-residents, are understood in the sense defined by the Law of Ukraine «0n Taxation of Enterprise Profits.* Subjects of entrepreneurial activity created after this Law came into effect irrespectively of the type of their business activity and planned volumes of op-erations on goods (works, services) sales and acting persons coming under the determination of this Law are obliged to get registered as taxpayers at their lo-cation in a tax office. Operations being subject to taxation are shown in the chart 3.
Subject to taxation are taxpayers' operations on: > sale of goods (works, services) on the customs territory of Ukraine, including operations on payment of services value according to agreements on executive leasing and operations on transfer of property right for pawn objects to creditor for repayment of credit liabilities of the depositor;
> import (sending) of goods to the customs territory of Ukraine and receiving of works (services) provided by non-residents for their use or consumption within the customs territory of Ukraine, including operations on import (sending) of property according to agreements of lease, pawn or mortgage;
> export (sending) of goods outside the customs territory of Ukraine and rendering services (execution of works) for their consumption outside the customs territory of Ukraine.
Chart 3.
The Tax is Calculated According to Rates:
VAT rates
20% rate (Article 6.1 of the Law)0% rate (Article 6.2,11,6 of the Law)
The Sum of the Tax Liabilities is Determined:
Tax liability is a sum total of the value added tax amount received (chained) by taxpayer for accounting (tax) period.


where
TB - tax base;
OT - other taxes (including price);
RP - regulated prices;
ID - import duty (including customs' duties);
FP - free prices; GC - gross costs;
ED - excise duty;
P- profit.
The Sum of Tax Credit is Determined:
Tax credit is an amount by which a payer of VAT has the right to reduce his tax liability for the accounting period.
The right to tax credit can be applied only to non-residents' representative offices registered with a tax office as value added tax payers and keep corre-sponding accounting documents (accounting books of sale and purchase of goods (works, services), tax returns).

where
tax credit;
sum of taxes taxpayer paid in accounting peri-od while purchasing goods (works, services);
sum of taxes paid by taxpayer in accounting period while purchasing main assets;
sum of taxes paid by taxpayer in accounting period while purchasing intangible assets.
Procedures for Defining Tax Amounts
Tax amount subject to be paid to the budget or refunded from the budget = Total sum of tax liabilities of the accounting period - Tax credit amount of the accounting period
VAT Payment and Reporting Deadlines
The value added tax payment deadline is not later than the twentieth of the month that follows the accounting period. The reporting (tax) period may equal one calendar month or one calendar quarter depending on the volume of taxable operations on goods (works, services) sales in compliance with the cur-rent legislation. Within the set tax payment time-frame, a taxpayer files with a tax office located at the place of his residence a tax return.

During operations on import (sending) of goods (works, services) to the cus-toms territory of Ukraine, the v^lue added tax is paid when filing customs freight declaration simultaneously with paying fee and customs duties in com-pliance with The Procedure for Paying the Value Added Tax to the Budget When Importing (Sending) Goods to the customs Territory of Ukraine, Approved by the Decree of the Cabinet of Ministers of Ukraine as of April 02, 1998, No 417. The payment of the value added tax when importing (sending) goods (works, serv-ices) to the customs territory of Ukraine one can postpone by issuing a tax promissory note. The issuing of a tax promissory note is done after the wish of the value added tax payer. The noteholder is the State Tax Administration (In-spection) located in the district where the maker is registered as a value added tax payer. The time-frame for the issued tax promissory note cannot exceed 30 days, including the date of its issue (The Procedure for Issuing, Circulation and Cancellation of Promissory Notes Issued for the Sum of the Value Added Tax when Importing (Sending) Goods to the Customs Territory of Ukraine, Approved by the Decree of the Cabinet of Ministers of Ukraine as of October 01, 1997, No. 1104).