Is an Adjustment Calculation Required on the Date of Additional Payment/Refund?

In the media, one can read explanations from SFSU employees stating that «in case of a change in the amount of compensation for the value of goods/services, an adjustment calculation is prepared on the date of additional payment/refund of funds». That is, according to their logic, if the value of goods (works, services) is revised (between the buyer and the seller) downwards or upwards, the adjustment calculation to the tax invoice previously issued by the seller may be prepared not at the moment of deciding on such revision, but exclusively at the moment of «additional payment/refund of funds» (the difference between the previous and final value).

Let's try to understand how justified the tax authorities' position on this issue is.

As we understand the logic of the tax authorities, in substantiating this conclusion, they refer to paragraph 21 of the Procedure for Filling Out a Tax Invoice, approved by Order of the Ministry of Finance of Ukraine dated 31.12.2015 No. 1307, registered with the Ministry of Justice of Ukraine on 26.01.2016 under No. 137/28267 (hereinafter – Procedure No. 1307), according to the third paragraph of which «the procedure for preparing an adjustment calculation and its registration in the Unified Register of Tax Invoices is similar to the procedure provided for tax invoices, except for cases provided for by this Procedure».

In turn, according to paragraph 187.1 of the Tax Code of Ukraine (hereinafter – TCU), a tax invoice is issued upon the occurrence of the «first event» – either the date of shipment of goods (works, services), or the date of crediting funds to the seller's account from the buyer. And since in the case of a revision of the value of goods (works, services), no additional shipment occurs, then, in the opinion of the tax authorities, the basis for preparing an adjustment calculation in this case can only be one event – «additional payment/refund of funds».

Reasons why we cannot agree with the position of the tax authorities

We cannot agree with such a point of view of the tax authorities for several reasons:

1. This option definitely cannot work if, at the moment the buyer and seller decide to reduce prices for previously shipped goods (works, services), full settlement has not occurred between them (when such settlement either has not been made at all, or has only been partially made) – in such a case, according to the logic of the tax authorities, it turns out that the need to prepare an adjustment calculation (РК) may never arise at all (or it may arise for an amount less than the difference between the previous and revised value). While questions from controlling bodies regarding the seller's tax liabilities are unlikely to arise in such a case, the buyer's right to a tax credit for the tax invoice previously received from the seller (not reduced by the corresponding adjustment calculation to the actual purchase amount) will obviously be significantly questioned.
2. Paragraph 3 of clause 21 of Procedure No. 1307 defines only the «procedure for preparing an adjustment calculation,» not its date of preparation.
3. The specifics of preparing an adjustment calculation (in our opinion, including its date of preparation) are defined in paragraph 192.1 of the TCU – «if, after the supply of goods/services, any change in the amount of compensation for their value occurs, including a subsequent price revision, recalculation in cases of return of goods/services to the person who provided them, or upon the supplier's return of the amount of advance payment for goods/services, the amounts of tax liabilities and tax credit of the supplier and recipient are subject to appropriate adjustment based on an adjustment calculation to the tax invoice.» At the moment of signing the Price Revision Act (or another document of similar nature) for goods (works, services), a «change in the amount of compensation for their value» is precisely carried out – accordingly, it is at this moment that the seller has the necessity (or rather, even the obligation) to prepare an adjustment calculation.

If, according to the logic of the tax authorities, after revising prices for previously shipped goods (works, services), no event of further additional shipment occurs (and therefore, there are no grounds for preparing an adjustment calculation for such an event), then another event provided for in paragraph 187.1 (the basis for preparing a tax invoice or adjustment calculation) – «the date of crediting funds from the buyer/customer to the taxpayer's bank account as payment for goods/services to be supplied» – is also not fulfilled from a formal point of view:

• firstly, in the case of a price reduction for previously shipped goods, no «crediting of funds from the buyer/customer» will occur
• secondly, this event can serve as a basis for issuing a tax invoice (adjustment calculation) exclusively for situations where goods (works, services) are only to be supplied (i.e., planned to be supplied, not already supplied previously).

In addition, if desired, we could provide some further arguments here as to why the above-described position of the tax authorities cannot be applied in practice in most cases.

It is also worth adding that previously, in some of their other consultations on issues similar to those described above, SFSU employees still emphasized that the adjustment calculation should be prepared precisely «based on the results of the tax period during which the recalculation» of the value of shipped goods (works, services) was carried out.

However, the tax authorities' attempt to fundamentally change their approach to the date of preparing an adjustment calculation based on price revisions for shipped goods, at a minimum, requires taxpayers to pay attention to such operations and be prepared for possible appeals against unlawful decisions of SFSU employees.

UHY Prostor specialists are always ready to help their clients protect their legitimate interests in such situations.