How is value added tax (VAT) calculated? What are the requirements and…?

In order to calculate VAT, you must use the following formula:

VAT = Selling price (cost + profit) × tax rate.

For example, the cost of the product is 6,000 hryvnias, and the profit included in the cost is 2,000 hryvnias. In this case, the selling price will be – 6,000 + 2,000 = 8,000. We calculate the amount of tax at a rate of 20%: 8,000 × 20% = 1,600.

VAT registration is mandatory and voluntary.

1. Calculate the volume of transactions for VAT registration.

2. Compile and submit a registration application. Both voluntary and mandatory registration as a VAT payer begins with an applicant's application. Sample registration application - https://ck.tax.gov.ua/data/normativ/000/003/75916/1_PDV_zrazok_perevish.pdf. Submit an application to the body controlling your location within the following deadlines: mandatory registration — no later than the 10th day of the calendar month following the month in which the millionth volume of transactions was first reached; voluntary registration — no later than 10 calendar days before the beginning of the tax period. Submit an application to the control body at the place of your registration exclusively in electronic form.

3. Get an extract from the Register of VAT payers.

4. Submit your first VAT return.