The Ministry of Revenues andDuties has issued clarifications on VAT treatment of medicines and goods ofmedical purpose.*
The key provisions are the following:
 - The 7% rate only applies to the supply of medicines and goods ofmedical purpose in Ukraine. Therefore, imports are subject to the standard 20%rate. This means that importers will be in a constant VAT refund position.
 - Input VAT, including VAT paid at the 20% rate, is recoverable under thegeneral rule. VAT receivable (if any) can be claimed for refund.
 - The list of goods of medical purpose subject to 7% VAT is not definedyet. Until such list is approved, the 7 % VAT is applied to goods of medicalpurpose which were exempt from VAT before 1 April 2014.
 - Rules of VAT invoicing, as well as maintaining a VAT invoice register,were also clarified.

*Lettersof Ministry of Revenue and Duties # 7822/7/99-99-19-05-01-17 and #7860/7/99-99-19-04-02-17 dated 4 April 2014

 
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Ron Barden,Partner & TLS Leader, ron.j.barden@ua.pwc.com
Rob Shantz, Legal Partner, rob.shantz@ua.pwc.com
Slava Vlasov, Partner, Tax and Legal Services, slava.vlasov@ua.pwc.com
ViktoriaTymoshenko,Senior Manager, Tax and Legal Services, viktoria.tymoshenko@ua.pwc.com

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