Marking down food products: when the price can be reduced and when the goods must be written off

Products approaching their expiration date may be sold at a discount only as long as they remain safe and fit for consumption, their permitted sale period has not expired, proper storage conditions have been maintained, and the customer receives accurate information about the product and its price. A discount does not extend the shelf life and does not allow a product to be sold after it has expired. For highly perishable foods, it is particularly important to pay attention to the “use by” date.

If a product is expired, spoiled, unfit, or unsafe, it must be immediately withdrawn from sale and separated from products fit for sale. The store then arranges a return to the supplier, if permitted by the terms of the agreement, or writes off the product and ensures its proper handling. There is currently no mandatory state-prescribed “markdown inventory report”: the old regulation on markdowns ceased to be effective back in 2016. For legal entities, markdown and write-off transactions must be properly supported by primary documents, while VAT payers must separately take into account the rules of the Tax Code.

What “use by” and minimum shelf life mean

For food products, two concepts should be distinguished.

The general rule of the Civil Code also requires that goods with a shelf life be transferred to the customer with sufficient time remaining for them to be used for their intended purpose before the shelf life expires. Therefore, the store should plan markdowns in advance rather than at the last moment. This is particularly important for highly perishable products because of food safety risks.

When food products can be sold at a discount

A discount is permitted if the product remains legally eligible for sale at the time of purchase. This means that its permitted sale period has not yet expired, the product shows no signs of spoilage or danger, its packaging and labeling allow it to be used safely, and the storage conditions specified by the manufacturer have been observed. The market operator is responsible for complying with food safety requirements at all stages of circulation.

Common situations in which a markdown is possible:

• there is only a short period remaining before the “use by” date, but the product has been stored properly and remains fit for consumption;

• the minimum shelf life of a packaged product is approaching;

• the product has an external cosmetic defect that does not indicate spoilage and does not affect its safety or suitability;

• only the outer transport or decorative packaging is damaged, while the consumer packaging that protects the product remains intact;

• the store runs a promotion to sell remaining stock, seasonal goods, or a specific batch of products more quickly.

In each case, the decision to sell should be based not on whether the product “still looks fine,” but on whether its suitability, proper storage conditions, and legal eligibility for sale can be confirmed.

How to advertise a discount correctly

Article 15 of the current Law of Ukraine “On Consumer Rights Protection” expressly extends the rules for using the terms “discount” and “reduced price” to food products. These terms may be used if the goods are sold directly by the relevant seller, the discount applies for a specified limited period, and the new price is lower than the regular price. After announcing a discount, the customer must be informed of the price before the discount and the price after the reduction.

The term “sale” has additional conditions: it applies to all goods at a particular point of sale or to a clearly defined group of goods, is limited in time, and the prices must be lower than the regular prices.

Can the price be set below cost?

There is no general prohibition in pricing legislation against selling ordinary food products below their cost. The Law of Ukraine “On Prices and Pricing” defines a discount as a reduction in the price of goods and allows business entities to independently set free prices for goods that are not subject to state regulation. Therefore, the statement that marked-down goods are always prohibited from being sold below cost is incorrect.

At the same time, state-regulated prices, maximum markups, or other special rules may apply to certain goods. In addition, for a VAT payer, the selling price and the VAT taxable base are not always the same: paragraph 188.1 of the Tax Code provides that the taxable base for the supply of purchased goods generally may not be lower than their purchase price, except for exceptions provided for by the Code. Therefore, selling a product, for example, for UAH 70 when its purchase price was UAH 100 may itself be permitted, but VAT must be calculated taking the minimum taxable base into account.

When a markdown is no longer permitted

A discount does not turn an unfit or expired product into a product that is permitted for sale.

Law No. 2042-VIII expressly establishes liability not only for the sale of unsafe or unfit products, but also separately for offering highly perishable and non-highly perishable products for sale after the prescribed periods have expired. In other words, merely offering an expired product to a customer is already a violation, not only completing the sale through the cash register.

Can spoiled vegetables and fruit be marked down?

Vegetables and fruit with an imperfect appearance are not necessarily unfit for consumption. An irregular shape, minor surface scuffing, or another cosmetic defect does not in itself mean that the product is prohibited from sale. If the vegetable or fruit remains safe and fit for consumption, the store may reduce its price.

Rot, mold, significant biological spoilage, or a condition in which the product is no longer fit for consumption is a different matter. The food safety law classifies spoiled food products, among others, as unfit, while Law No. 2042-VIII establishes a separate fine for offering unfit products for sale or selling them. Such products must be rejected rather than sold at a lower price.

What to do with expired or spoiled goods

When a store discovers expired or unfit products, the safe procedure is as follows:

1. Immediately stop selling the product. It must be removed from the shelf, excluded from online sales, and prevented from being accidentally scanned at the checkout.

2. Physically separate it from goods intended for sale. Until the return or write-off is completed, it is advisable to use a separate labeled area, container, or refrigerated storage area so that employees cannot return the product to the sales floor.

3. Identify the product and batch. Record the name, quantity, batch or other traceability data, expiration date, reason for withdrawal, and supplier.

4. Check the agreement with the supplier. If the agreement provides for the return of expired, damaged, or unsold stock, arrange the return. The mere fact that the goods were received “on consignment” does not replace the terms of the specific agreement.

5. If a return is impossible, arrange a write-off. The document must confirm which specific goods, in what quantity, when, and for what reason were removed from inventory.

6. Ensure proper subsequent handling. Food products that have become waste are subject to waste management legislation. Products of animal origin that have been declared unfit for human consumption and fall under the definition of animal by-products are subject to separate special rules regarding collection, storage, transportation, processing, utilization, or disposal.

If it is established that an unsafe product has already reached consumers, not only internal write-off procedures but also product withdrawal or recall procedures and notification of the competent authority may apply in accordance with food legislation. This is a separate risk management process rather than an ordinary inventory write-off.

Documents for food product markdowns

There is currently no mandatory state-prescribed “markdown inventory report” for all enterprises. The regulation that previously governed the special procedure for marking down slow-moving goods ceased to be effective on March 9, 2016. Therefore, an enterprise may independently organize markdown documentation in its accounting policy or internal procedures.

For a legal entity, it is advisable to prepare an internal primary document — for example, a revaluation report or markdown report. Law No. 996-XIV requires business transactions to be supported by primary documents containing the mandatory details specified in Article 9. In practice, a markdown document should specify the product, its identifier or batch, quantity, reason for the markdown, old and new prices, the date the new price takes effect, and the responsible persons. The latter is part of the enterprise’s internal control system rather than a separate state-standardized form.

For write-offs, it is advisable to separately record the product name, quantity, value, reason for the write-off, date, warehouse or retail outlet, and, where possible, the batch and expiration date. If the goods are returned to the supplier, return documents are prepared in accordance with the agreement and the document workflow adopted by the parties.

Documents for Sole Proprietorships

Not all Sole Proprietorships are required to maintain accounting records under the National Accounting Standards, but entrepreneurs subject to the obligation to keep inventory records under the ECR Law are governed by Ministry of Finance Procedure No. 496. It requires information on the receipt and disposal of goods to be entered into the inventory record form on the basis of primary documents. Therefore, a write-off of goods must be supported by documentation if the Sole Proprietorship belongs to a category of persons required to maintain such records.

How to reflect markdowns and write-offs in accounting

For enterprises that keep records under the National Accounting Standards, inventories are measured at the lower of two values: initial cost or net realizable value. If the price of goods has decreased, they have been spoiled, become obsolete, or otherwise lost their originally expected economic benefits, they are measured at net realizable value. The difference between the initial and reduced valuation is included in the expenses of the reporting period.

If a product cannot be sold or used at all and ceases to meet the criteria of an asset, it is written off from inventory on the basis of a properly prepared document. Two different transactions should not be confused: markdown means that the product remains an asset and will be sold at a lower valuation; write-off means that it is removed from inventory.

VAT on markdowns and write-offs

A markdown itself does not automatically result in compensating VAT liabilities: the goods may still be used in taxable business activities through their sale. However, if a VAT payer sells purchased goods below their purchase price, the minimum taxable base under paragraph 188.1 of the Tax Code must be taken into account.

The situation is different for a write-off. In its current Public Information and Reference Database, the State Tax Service explains that if goods were purchased with VAT, the tax was included in the tax credit, and as a result of the write-off the goods begin to be used outside business activities, the taxpayer must accrue tax liabilities under paragraph 198.5 of the Tax Code based on the taxable base under paragraph 189.1 and prepare a consolidated tax invoice.

There are special exceptions. For example, the State Tax Service separately explains the procedure for losses within established natural loss norms: under certain conditions, compensating liabilities do not arise, whereas losses exceeding the established norms generally require VAT to be accrued. Therefore, natural loss, spoilage, theft, and the ordinary write-off of expired goods should not automatically be treated in the same way for tax accounting purposes.

ECR and PECR when selling discounted goods

Marked-down goods are sold through an ECR/PECR under the general rules. The payment transaction is processed for the actual full purchase amount after the discount has been applied, and the customer is provided with a payment document in the prescribed form. The fiscal receipt must correctly identify the product and reflect the actual transaction details in accordance with Law No. 265/95-VR and Ministry of Finance Regulation No. 13.

For example, if the regular price of yogurt was UAH 50 and the store legally set a price of UAH 35 before the “use by” date expired, the customer pays UAH 35 and the payment document must correspond to the transaction for UAH 35. A VAT payer must separately check the minimum taxable base under paragraph 188.1 of the Tax Code.

Storage, premises, personnel, and delivery

A food store is a market operator and must ensure compliance with hygiene requirements for food products at the stage of their circulation. This includes maintaining the required storage conditions and temperatures, protecting products from contamination, ensuring the proper condition of equipment and premises, and organizing operations so that unfit or withdrawn products are not mixed with products intended for sale. These requirements apply not only to store shelves but also to warehouse and transportation operations.

Market operators must develop, implement, and continuously apply procedures based on HACCP principles, except in cases provided for by law. The law allows a simplified approach for certain facilities, but this does not mean that there is no need to control expiration dates, temperatures, sanitary conditions, and other hazards. Certification of the HACCP system itself is not mandatory.

Employees who receive, store, display, or deliver products must comply with the food safety and hygiene procedures approved by the enterprise. It is particularly important to assign responsibility for daily checks of products with short shelf lives, temperature logs where required, and the procedure for immediately withdrawing unfit products.

Delivery to the customer does not extend the shelf life. Transportation conditions must maintain product safety, including the required temperature conditions. If the shelf life has already expired when the order is being assembled, or the product cannot legally be transferred to the customer for use before the expiration date, it should not be included in the order.

State registration of facilities and operating permits

An ordinary grocery store does not obtain a separate “food sales license” merely because it sells food products. However, the market operator must comply with the requirements applicable to its facility. Under Article 25 of Law No. 771/97-VR, facilities involved in the production and/or circulation of food products for which an operating permit is not required are subject to state registration.

As a general rule, an operating permit applies to facilities engaged in the production and/or storage of food products of animal origin, but Article 23 provides for a number of exceptions. These expressly include the operation of food retail establishments. Therefore, for an ordinary retail store, the typical requirement is facility registration rather than obtaining an operating permit. If, in addition to retail trade, an enterprise carries out separate production, specialized storage, or other operations involving products of animal origin, the status of the specific facility must be determined separately under Article 23.

For facilities that do require an operating permit, the law provides for its temporary suspension in specified cases. Grounds for revoking the permit include an application by the operator to terminate operation of the relevant facility, termination of the legal entity, termination of the business activity of a Sole Proprietorship, or a court decision.

Traceability of products and documents

A store must be able to determine from whom food products were received and, when supplying them to other operators, to whom they were transferred. The law requires systems and procedures to be implemented that make it possible to organize this information and provide it to the competent authority upon request.

When dealing with expired products, this means that in the event of a problem, the store must be able to quickly identify the supplier, the relevant delivery or batch, and the remaining stock. This is why invoices, batch data, return documents, write-off reports, and HACCP procedure records have not only accounting significance but also practical importance for protecting the business.

Fines for expired, unfit, and unsafe food products

The main sanctions for market operators are established by Article 65 of Law No. 2042-VIII. They are calculated in minimum wages. In 2026, the minimum wage from January 1 is UAH 8,647.

Therefore, the argument that “the product is expired but still fine” does not exempt the operator from liability. The law specifically provides for fines even where the period has already expired but the product has not actually become harmful yet. If it is also unfit or unsafe, significantly stricter provisions apply.

Separate fines are also provided for violations of hygiene requirements, operating an unregistered facility, operating without a mandatory operating permit, failure to comply with HACCP requirements, traceability violations, failure to fulfill obligations regarding the withdrawal/recall of unsafe products, and violations of food information legislation. Therefore, shelf-life control should be part of the store’s overall food safety system rather than a separate action performed by a salesperson before the end of a shift.

Markdowns, revaluation, and write-off of expired goods in Torgsoft

In Torgsoft, the Revaluation Report can be used to reduce prices in advance. The software allows you to add the required products, set a percentage discount or a specific discounted price, change the retail or wholesale price, and apply the revaluation to selected retail outlets. Each report stores its number, date, responsible employee, and comment, while the revaluation history makes it possible to check who changed the price and when. New labels can be printed after the revaluation.

For goods that can no longer be sold, Torgsoft provides the Document → Write-off Goods from Warehouse mode. The software help documentation expressly lists expiration of the shelf life as one of the reasons for a write-off. Goods can be added to the document from the warehouse or by scanning; once added, the goods are considered written off from the relevant accounting object. The form displays the quantity, retail price, cost, write-off amount, and warehouse balance, making it possible to record losses and prevent unfit goods from remaining among inventory balances available for sale.

For packaged goods sold by weight, certain models of retail scales supported by Torgsoft allow the shelf life and sale-by date to be transmitted. If this function is supported by the specific scales, they can automatically calculate the sale-by date based on the entered shelf life and use it on the label. This feature should be regarded as an auxiliary labeling tool: it depends on the equipment model and does not replace the store’s procedures for monitoring the shelf life of specific batches and physically withdrawing expired goods.

What should be included in the store’s internal procedures

To reduce write-offs and the risk of fines, the store should establish a single procedure for handling products with short shelf lives: who checks the dates and how often, how many days before expiration a product is added to the markdown list, who approves the new price, how the price tag and the price in the accounting system are changed, where withdrawn products are physically stored, who processes returns or write-offs, and who verifies that the goods have actually been removed from sale.

This process gives the entrepreneur three levels of protection at once: expired goods do not reach the customer, markdowns take place before the end of the legally permitted sale period, and every disposal is supported by documentation and accounting records.

Official sources

• Law of Ukraine “On the Basic Principles and Requirements for Food Safety and Quality” dated 23.12.1997 No. 771/97-VR — Articles 20–25, requirements for market operators, HACCP, traceability, operating permits, and facility registration. Text of the law on the website of the Verkhovna Rada of Ukraine

• Law of Ukraine “On Information for Consumers Regarding Food Products” dated 06.12.2018 No. 2639-VIII — Article 1 and other provisions concerning the “use by” date, minimum shelf life, and food information. Text of the law on the website of the Verkhovna Rada of Ukraine

• Law of Ukraine “On State Control over Compliance with Legislation on Food Products, Feed, Animal By-Products, Veterinary Medicine and Animal Welfare” dated 18.05.2017 No. 2042-VIII — Article 65, financial sanctions for unfit, unsafe, and expired food products, as well as other violations. Text of the law on the website of the Verkhovna Rada of Ukraine

• Law of Ukraine “On Consumer Rights Protection” dated 12.05.1991 No. 1023-XII — Article 15, rules for using the terms “discount,” “reduced price,” and “sale,” which expressly apply to food products. Text of the law on the website of the Verkhovna Rada of Ukraine

• Resolution of the Cabinet of Ministers of Ukraine dated 15.06.2006 No. 833 “On Approval of the Procedure for Conducting Trade Activities and the Rules for Trade Services in the Consumer Goods Market” — current general requirements for trade activities, premises, and customer service. Text of the resolution on the website of the Verkhovna Rada of Ukraine

• Law of Ukraine “On Prices and Pricing” dated 21.06.2012 No. 5007-VI — Articles 1, 10–12, the concept of discounts, free prices, and state-regulated prices. Text of the law on the website of the Verkhovna Rada of Ukraine

• Law of Ukraine “On Accounting and Financial Reporting in Ukraine” dated 16.07.1999 No. 996-XIV — Article 9, primary documents. Text of the law on the website of the Verkhovna Rada of Ukraine

• National Accounting Regulation (Standard) 9 “Inventories,” approved by Order of the Ministry of Finance dated 20.10.1999 No. 246 — paragraphs 24–28, measurement of inventories at net realizable value and markdowns. Text of National Accounting Regulation (Standard) 9 on the website of the Verkhovna Rada of Ukraine

• Tax Code of Ukraine dated 02.12.2010 No. 2755-VI — paragraphs 188.1, 189.1, and 198.5 concerning the VAT taxable base and write-off of goods. Tax Code of Ukraine

• Law of Ukraine “On the Use of Electronic Cash Registers in Trade, Catering and Services” dated 06.07.1995 No. 265/95-VR — Article 3, processing payments and providing payment documents. Text of the law on the website of the Verkhovna Rada of Ukraine

• Order of the Ministry of Finance of Ukraine dated 21.01.2016 No. 13 — requirements for the form and content of fiscal receipts. Text of the order on the website of the Verkhovna Rada of Ukraine

• Order of the Ministry of Finance of Ukraine dated 03.09.2021 No. 496 — Procedure for maintaining inventory records for Sole Proprietorships required to keep such records. Text of the order on the website of the Verkhovna Rada of Ukraine

• Law of Ukraine “On Waste Management” dated 20.06.2022 No. 2320-IX — rules for waste management, including food waste. Text of the law on the website of the Verkhovna Rada of Ukraine

• Law of Ukraine “On Animal By-Products Not Intended for Human Consumption” dated 07.04.2015 No. 287-VIII — special rules for handling unfit products of animal origin if they acquire the status of such animal by-products. Text of the law on the website of the Verkhovna Rada of Ukraine

• Law of Ukraine “On the State Budget of Ukraine for 2026” dated 03.12.2025 No. 4695-IX — Article 8: the minimum wage from January 1, 2026 is UAH 8,647. Text of the law on the website of the Verkhovna Rada of Ukraine