Google Tax Law & # 171; & # 187; fully entered into force on January 1, 2022. The document introduces European norms and obliges international Internet companies to pay 20% value added tax (VAT) in Ukraine, reports Chronicle.info with reference to RBC-Ukraine.
Who should pay 20% VAT
The law stipulates that non-residents will be included in the list of persons who are registered as VAT payers in Ukraine. Registration of the payer will be simplified and remote (on a specially designed web portal). Thus, Internet giants will pay VAT instead of Ukrainian companies.
According to the law, the following electronic services are subject to taxation:
- the supply of images or texts,
- the supply of audiovisual works, video on demand, games,
- the provision of & # 171; clouds & # 187; for data placement,
- software delivery and updates to it, as well as its remote maintenance,
- advertising on the Internet, mobile applications and other electronic resources.
At the same time, corporations will not pay 20% VAT for the provision of electronic educational services.
Increase in cost by 20%
At the same time, not all Ukrainian companies that cooperate with Internet giants are VAT payers. This could potentially lead to an increase in the cost of Internet services. Specifically, Facebook sent out a 20% markup notice to business account owners effective January 1, 2022. This will affect customers who are not VAT payers. If a company provides a VAT ID, Facebook will not add VAT to ad purchases. Google sent a similar message.
At the same time, the head of the financial committee of the parliament Danil Getmantsev noted that this law will not affect ordinary users in any way. After all, services such as searching on Google or using social networks will remain free.
& # 171; The so-called Google tax introduces a simple VAT mechanism for multinational corporations providing e-commerce services. These are Facebook, Netflix, and Viber. They have to pay tax in Ukraine, as well as in more than 80 jurisdictions around the world & # 187; & # 8212; said the people's deputy from & # 171; Servants of the people & # 187 ;.
European norms
As noted in the explanatory note to the draft law, the establishment of special rules for taxation of VAT on electronic services is becoming a common practice in foreign countries, for example, in the European Union.
In particular, for the first time, the European Union drew attention to the problem of taxation of VAT on electronic services, having changed the rules for determining the place of delivery of such services. So, by 2015, the place of supply of electronic services was determined by the place of registration of the supplier, which allowed some suppliers to minimize tax by registering in countries where a low VAT rate was applied or services were generally exempted from taxation. That is why, the rules were developed which would allow to impose VAT on electronic services exactly at the place of their consumption.
In addition, in order to implement its plan, a special system MOSS (Mini One Stop Shop) was introduced in the EU, which allowed business entities to declare and pay VAT in the country of consumption of the service without the need to register as a VAT payer in accordance with the general procedure. The model of VAT taxation of electronic services proposed by the European Union became the basis for other states in the development of similar tax regimes, allowing to increase the size of tax revenues to the budget of the respective state by taxing services directly in the country of their consumption.
Recall the so-called & # 171; about Google tax & # 187; The Verkhovna Rada approved at the beginning of June 2021.
Earlier, the head of the financial committee of the Verkhovna Rada, Danil Getmantsev, noted that such giants as Facebook, Viber and others do not pay VAT. According to estimates, the state budget receives less than UAH 3 billion from advertising services alone.