Business will not be denied a tax credit due to one indicator: changes are being prepared in the Rada
In Ukraine, the rules for forming VAT tax credits for businesses may change. Deputies have registered a bill that aims to prevent situations where companies are denied a tax credit due to the absence of unfinished production balances in accounting at the end of the year.
The authors of the document emphasize that the mere absence of such indicators does not indicate violations or conducting activities outside the scope of business operations. The initiative was prepared taking into account the legal position of the Supreme Court, which has already expressed its opinion on this issue in judicial practice.
What changes to the tax credit are being proposed in the Rada
The initiators of bill No. 15275 propose to supplement paragraph 198.5 of article 198 of the Tax Code with a new paragraph.
It states that the absence of indicators regarding unfinished production balances of goods in accounting as of the end of the reporting year cannot indicate the conduct of activities outside the scope of business operations or be grounds for depriving the right to a tax credit.
VAT tax credit: why changes are needed
In the explanatory note, the authors emphasize that current tax legislation defines the right to a tax credit through the reality of business transactions, the presence of primary documents, tax invoices, and the business purpose of transactions.
The document also reminds that formally executed primary documents or the mere fact of payment cannot be sufficient grounds for a tax credit without the actual conduct of a business transaction.
The Supreme Court explained when a tax credit cannot be denied
The bill is based on the legal position of the Supreme Court set out in the ruling dated July 2, 2025, in case No. 160/9737/24.
The court concluded that the provisions of the Tax Code do not make the occurrence of VAT tax liabilities dependent on the presence or absence of unfinished production balances in accounting records.
The ruling also states that the Tax Code defines other legally significant circumstances for the emergence of the right to a tax credit, and the mere absence of unfinished production balances cannot automatically cause negative tax consequences for the taxpayer.
How the VAT bill may affect business and tax audits
The authors of the bill believe that adopting the changes will help ensure taxpayers' rights to receive a tax credit and eliminate ambiguous interpretations of the norms during tax audits.
The explanatory note also states that the implementation of the bill will not require additional expenditures from the state budget.
The document provides that if adopted, the law will come into force the day after its official publication.
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