Taxation rules for parcels are to be changed

Two draft laws have been registered in the Verkhovna Rada of Ukraine that propose to change the rules of taxation of international parcels:

• Draft Law No. 12429 " On Amendments to the Tax Code of Ukraine on Bringing the Procedure for Taxation of Operations on Importation (Shipment) of Goods in International Postal and Express Parcels to the Requirements of Council Directive 2006/112/EC of 28 November 2006 on the Common System of Value Added Tax"
• Draft Law No. 12430 "On Amendments to the Customs Code of Ukraine to bring the procedure for payment of customs duties in line with the requirements of Council Directive 2006/112/EC of the European Union of November 28, 2006 on the common system of value added tax and the Law of Ukraine "On Postal Service" on certain issues of international postal exchange".

Draft Law No. 12429 proposes, in particular:

► to exclude the provisions stipulating that transactions on importation of goods not exceeding the equivalent of EUR 150, except for importation of goods with the total invoice value not exceeding the equivalent of EUR 45, for one individual recipient in one dispatch from one individual sender in international mail or in one express carrier's cargo from one individual sender in international express mail, are not subject to VAT, provided that

• such goods are sent by the sender to the recipient without any payment, are intended for personal or family use by the recipient,
• their characteristics and quantity do not indicate that they are imported for any commercial purpose;

► introduction of a new transaction subject to VAT - distance selling of goods;

► defining a non-resident person as a taxpayer for the remote sale of goods who carries out such sale. At the same time, the Draft Law, by analogy with EU Council Directive No. 2006/112/EC, proposes to equate a person who facilitates distance selling through an electronic interface, such as an online platform, portal, website, etc., with a person who carries out distance selling.

► introduction of a special procedure for VAT taxation of distance sales of goods in batches with an invoice value of up to EUR 150, which is entitled to be used by persons engaged in distance sales of goods;

► exemption from VAT on the importation (shipment) of goods into the customs territory of Ukraine in international mail or international express shipments with a value of up to EUR 150, provided that the VAT payable

• is paid on the distance sale of goods;
• the customs declaration contains information on the individual special tax number of the person paying value added tax on the remote sale of goods.

Amendments to the Customs Code and the Law "On Postal Services"

Draft Law No. 12430 proposes the following amendments to the Customs Code of Ukraine:

► to define the specifics of applying the exchange rate for the purposes of customs formalities in respect of goods, VAT on which, when transported (sent) across the customs border of Ukraine in TIR or CIW, is payable in accordance with Article 206-1 of the TCU by the person who carried out their remote sale

► to determine the procedure for VAT and import duty taxation of goods transported (sent) in customs ternary or customs double entry zones depending on whether such goods are sent to the address of a company or a citizen, and to establish the procedure for determining the tax base in such cases;

► introduce a customs declaration for low-value goods with a data set similar to the H7 customs declaration used in the European Union, and establish the specifics of its use;

determine the procedure for declaring goods with a total invoice value of up to EUR 150 (excluding excisable goods) that are transported (sent) to a TIR or a BW for one citizen recipient and for which VAT is paid in accordance with Article 206-1 of the TCU by the person who carried out their remote sale;

► to determine the procedure for the exchange of information between the central executive body that implements the state customs policy and the central executive body that ensures the implementation of the state tax policy on goods imported into the customs territory of Ukraine in TIR and CII, VAT on which was paid by the person who carried out the remote sale of goods.

It is also proposed to amend Article 29 and Part 3 of Article 31 of the Law "On Postal Service", which regulate the issues of international postal exchange. In particular, it is proposed to

• to establish that other postal operators, in addition to the designated postal operator, have the right to carry out international postal exchange. The draft also proposes to define a list of conditions that such operators must meet;
• to establish that cooperation in the provision of postal services with postal operators and business entities of foreign countries is carried out by postal operators that have the right to carry out international postal exchange.

The texts of the draft laws state that they will come into force one year after the day following their publication.