You're reading: Cabinet proposes canceling VAT on services of transporting passengers by Hyundai trains until 2017

The Cabinet of Ministers of Ukraine has proposed that value added tax is canceled on the provision of services carrying passengers by Intercity+ trains at speeds of 90 kilometers per hour, with a permissible speed limit up to 200 kilometers per hour in first and second class wagons with seats.

The initiative is stipulated in a draft law on amendments to the Tax Code of Ukraine regarding the improvement of the mechanism for levying value added tax, which was posted on the Web site of the Finance Ministry.

According to the analysis of legal initiatives, it is proposed to cancel the value added tax regime for transportation by Intercity+ trains with a zero tax rate and refunding of the value added tax sums from the national budget, and exempt the transactions from paying value added tax.

The authors of the document said that the exemption from paying value added tax will allow taxpayers that provide services in the transportation of passengers by Intercity+ trains not to pay value added tax to the budget. The sums of the tax paid due to the purchases of goods or services and capital assets that will be used in the said transactions are not considered a tax credit of the taxpayers.

The bills aims to prevent the irrational use of the financial resource of the state and assess the appropriateness of the further provision of indirect state support to passenger transportation by Intercity+ trains.

As reported, Ukrainian railways since the launch of Intercity+ trains produced by Korea’s Hyundai Rotem and Intercity trains made by Skoda (May 27, 2012) have carried 1.2 million passengers. The average loading of the trains is 52%.