As is known, according to the Tax Code, except for imported property, the contribution of any property to the charter capital of an enterprise in the form of shares was considered a VAT-exempt operation. At the same time, according to the relevant article of the Tax Code, the VAT paid on goods (works and services) purchased by persons engaged in VAT-exempt or non-VATable operations is non-refundable. Therefore, according to the requirements of the Tax Code, when an asset is contributed to the charter capital, the VAT amounts paid and refunded for that asset were required to be restored to the state budget.
According to recent amendments made to the Tax Code, to reduce the tax burden of VAT payers and stimulate investment, the contribution of fixed assets to the enterprise’s charter capital in the form of shares will be subject to VAT at a zero rate. Specifically, when fixed assets are contributed as shares without direct acquisition of other property in return, the operation will be taxed at a zero VAT rate, and the VAT paid on these fixed assets will be refundable.