The Verkhovna Rada (Parliament) of Ukraine adopted in the second reading the draft amendments to the Tax Code, introducing value-added tax (VAT) to transactions for the e-services provided by non-residents to individuals in Ukraine, Report informs via Ukrainian media.
The law aims to increase state budget revenues from VAT by attracting non-residents to VAT taxation who provide e-services to individuals, with the place of delivery in the customs territory of Ukraine. Besides, the document is expected to create favorable conditions for effective tax payment procedures for businesses and the state.
Reportedly, it is primarily about introducing a tax on Ukrainian citizens' purchase of services provided by such tech companies as Apple, Google, Microsoft, Netflix, Wargaming, Bloomberg, Alibaba, Booking, and others. After the law's adoption, Ukrainians will be required to pay VAT on subscriptions to services or advertisements done in Ukraine.
The law excludes the provision from the Tax Code, according to which residents, when paying income to non-residents for the production and/or distribution of advertising, must pay 20% of the payment amount as a tax at their own expense.
The law also exempts the supply of electronic services from VAT by providing access to electronic educational resources as part of the provision of educational services.
In addition, the law defines the concept of "electronic services", establishes the rules for determining the place of supply of electronic services (B2C), establishes a simplified procedure for registering a VAT payer for non-resident suppliers, which can be carried out remotely on a special website.
Also, non-residents are exempt from the obligation to register tax invoices. At the same time, it is provided for the payment of taxes for non-residents in foreign currency.
The law also includes non-residents in the list of persons who are registered as VAT payers.
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