22/02/21
On February 17, 2021, the Verkhovna Rada of Ukraine adopted in the first reading the draft Law1, according to which non-resident companies that provide electronic services to individuals in Ukraine are required to apply for registration as a VAT payer by March 31, 2022, if the total amount of such operations during 2021 exceeds the equivalent of UAH 1 million.
The draft Law prescribes a 20% VAT rate on electronic services.
Electronic services include, among others:
At the same time, electronic services do not include the following operations:
Also, the draft Law abolishes the remittance tax on payments to non-residents for the production and/or distribution of advertisements. Currently the tax is paid by Ukrainian buyers of advertisements at a 20% rate and at their own cost.
We assume that the draft Law may be amended before the second reading. Thus, we will monitor the developments and provide you with more details after the final adoption.
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1 Draft Law of Ukraine “On Amendments to the Tax Code of Ukraine on Abolition of Taxation of Income Received by Nonresidents in the Form of Payment for Production and / or Distribution of Advertisements and Improvement of Value Added Tax Procedure for Transactions on Supply of Electronic Services to Individuals by Nonresidents” № 4184 of 02.10.2020 (hereinafter - the draft Law)