Ukraine’s parliament by 283 votes endorsed the law no.4148 that, according to its introductory note, aims to ‘increase revenues’ by imposing  a value-added tax’  on non-residents ‘providing electronic services’ to Ukrainians.

According to the policy, bigh tech international companies will be imposed 20% VAT.

Among those facing the new tax  are Facebook, Netflix, Tik Tok, Instagram, YouТube, Viber and other big-tech names.

Key points

The list of “electronic services” will  include

  • supply of various content, such as images, photos, e-books, magazines, audio-visual content, ondemand video, games,
  • provision of access to various web resources, cloud s torage services,
  • supply of software (including updates) (except for on tangible mediums), services on remote maintenance of software and electronic equipment,
  • advertising services on the internet, mobile apps and other electronic resources;

New tax rules for non-residents

▪ the registration of a qualifying non-resident as a VAT-payer shall be performed online

▪ to qualify for the above VAT, “electronic services” must be provided via internet and to an individual customer located in Ukraine

▪ the annual turnover from the supply of “electronic services” triggering VAT obligations – UAH 1 million (approx. EUR 30,200)

▪ tax invoice are not applicable

The law put forth by ‘Servant of the People’ MPs makes suppliers of ‘electronic educational services’ exempt from this taxation.

Danylo Getmantsev,  who heads Ukraine’ parliament finance committee, assured Thursday the policy will not affect the end users.

‘So-called Google tax introduces a simple mechanism of VAT payments for transnational corporations that provide services in the field of electronic commerce. It is Facebook, Netflix, and Viber. They have to pay taxes in Ukraine much like they do it in over 80 jurisdictions across the world,’ said the MP.

The move sees Ukraine following the other countries strategy of domestic taxation for transnational companies. Earlier, Denys Getmansev claimed that ‘with electronic services failing to pay a VAT, Ukraine is losing at least 3 billion hryvnas yearly’.