Refund of value added tax from the state budget to investors under a production sharing agreement

Investors under production sharing agreements are entitled to a refund of the amounts of budget VAT refunds.

Applications from investors of production sharing agreements for the return of the amount of budget compensation from the value-added tax are formed on the basis of the databases of the State Treasury Service of Ukraine.

Applications for the return of budget compensation from the budget of the amount of value-added tax are automatically entered into the Temporary Register within one business day in the chronological order of their receipt.

Tax inspectorates verify the submitted applications of Investors for refunds and enter them into the Temporary Register of Refund Applications.

There are only 2 conditions for investors to receive from production sharing agreements:

- conducting an inspection at the tax inspection;

- or declaring the tax notice-decision of the tax inspection illegal and canceling it.

The agreed amount of budget compensation becomes available to the State Treasury and is directed to budget accounts for payments to investors under production sharing agreements.

Tax amounts not reimbursed to investors under a production sharing agreement are considered arrears. 

A penalty of 120% of the discount rate of the National Bank of Ukraine is charged on the amount of such arrears.

However, it should be noted that investors have the right to collect the debt only after the amount has acquired the status of agreed.