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Verkhovna Rada to oblige Google and Microsoft to pay tax to Ukrainian budget

Source : 112 Ukraine

286 Ukrainian lawmakers voted for the bill
15:14, 17 February 2021

Verkhovna Rada
Open source

The Verkhovna Rada supported in the first reading bill #4184, which is aimed to oblige Internet giants to pay taxes in Ukraine. 286 parliamentarians voted for this bill.

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The draft law proposes to amend the Tax Code of Ukraine adding the norms on abolition of taxation of income received by non-residents in the form of payment for production and/or distribution of advertising, and norms on improvement of VAT taxation on transactions for supply of electronic services by non-residents to natural persons.

"The purpose of this bill is to increase the State Budget revenues from VAT by attracting VAT from non-residents who provide electronic services to individuals, the place of supply of which is located in the customs territory of Ukraine, and creating favorable conditions for efficient and easy administration for business and for the state procedures related to the payment of taxes," an explanatory states.

In particular, it is proposed to:

exclude the norm according to which residents, when paying income to non-residents for the production and/or distribution of advertising, must pay tax at the rate of 20% of the amount of such payments at their own expense;

clearly define that for documents certifying the fact of delivery of services drawn up in electronic form, the date of execution of such a document is the date of drawing up of such an electronic document;

determine the list of electronic services;

exempt the supply of electronic services from VAT by providing access to electronic educational (training) resources as part of the provision of educational services;

include non-residents in the list of persons registered as payers of value added tax;

establish rules for determining the place of delivery of electronic services (B2C);

establish the form and determine the procedure for sending a tax notification to a non-resident and a complaint about such a decision;

define a simplified procedure for registering a VAT payer for non-resident suppliers, which can be carried out remotely in electronic form on a specially developed web portal;

determine the rules of tax accounting for value added tax of non-residents providing electronic services to individuals, the place of delivery of which is located in the customs territory of Ukraine;

exemption from the obligation of a non-resident to register tax invoices;

provide for the payment of a tax liability for a non-resident in foreign currency.

According to the Chairman of the Parliamentary Committee on Finance, Tax and Customs Policy Danylo Hetmantsev, the bill does not introduce a new tax, but provides for a convenient form of payment of value added tax for digital giants and multinational corporations that provide services in electronic form in Ukraine. Only from advertising services online Ukraine can receive 3 billion UAH (107.6 million dollars) per year.
 
The explanatory note cites the example of the Russian Federation, where in 2017 non-residents were obliged to pay value added tax from the sales of electronic services. It is about such technology giants as Apple, Google, Microsoft, Netflix, Wargaming Group, Bloomberg, Alibaba, Booking.com.
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