Prozorro is changing the rules for evaluating tenders: offers will be compared without VAT

Ukraine is changing the approach to evaluating tender offers in the Prozorro and Prozorro Market systems. After the update, the electronic system will automatically compare participants’ offers without taking into account value-added tax.

The Ministry of Economy of Ukraine announced the new rules.

The main goal of the changes is to eliminate the imbalance between VAT payers and entrepreneurs on the simplified taxation system. Previously, due to the inclusion of VAT, offers from large companies often looked more expensive than offers from individual entrepreneurs, even if the actual cost of the product or service was lower.

Now the system will determine the most economically advantageous offer at the lowest “clean” price – excluding VAT. The new algorithm will fully work from July of this year.

The changes will affect not only open tenders, but also purchases through Prozorro Market and direct contracts after unsuccessful tenders.

For businesses, this means the need to reconsider approaches to forming tender prices. Accountants and tender specialists will have to clearly distinguish between the price of participation in the procurement and the final amount of the contract.

The Ministry of Economy expects that the new rules will allow small businesses and individual entrepreneurs to compete with large companies on more equal terms, as well as increase the transparency of the evaluation of tender proposals.