{"id":19591,"date":"2021-06-09T10:35:37","date_gmt":"2021-06-09T08:35:37","guid":{"rendered":"https:\/\/kmp.ua\/?p=19591"},"modified":"2021-07-22T13:08:05","modified_gmt":"2021-07-22T11:08:05","slug":"verkhovna-rada-has-adopted-the-draft-law-no-4184-google-tax-and-other-important-changes","status":"publish","type":"post","link":"https:\/\/kmp.ua\/en\/analytics\/infoletters\/verkhovna-rada-has-adopted-the-draft-law-no-4184-google-tax-and-other-important-changes\/","title":{"rendered":"Verkhovna Rada has adopted the Draft Law No. 4184: “Google Tax” and other important changes"},"content":{"rendered":"

On June 3, 2021 the Verkhovna Rada of Ukraine adopted the Law \u00abOn Amendments to the Tax Code of Ukraine Concerning the Abolition of Taxation of Income Received by Non-Residents in the Form of Payment for Production and\/or Distribution of Advertising and Improvement of the Procedure for Value Added Taxation of Transactions on Supply of Digital Services by Non-Residents to Individuals\u00bb (the Law) (the bill No. 4184)<\/a>1<\/a><\/sup>.<\/p>\n

Since the first reading, a set of amendments have been made to the text of the bill, thereby the final version of the Law differs significantly from the previous one.<\/p>\n

It is expected that the Law will enter into force on the day following the day of its promulgation (except for certain paragraphs).\u00a0In particular, with regard to the procedure for value added taxation of transactions on supply of digital services by non-residents to individuals, the Law will apply to tax periods starting from January 1, 2022.<\/p>\n

The text of the Law has not been signed by the President or published in official sources yet. Therefore, this material is based on the text of the bill submitted for the second reading and will require revision after the official publication of the Law.<\/p>\n

According to the text of the bill for the second reading published on the website of the Verkhovna Rada, the following changes are proposed.<\/p>\n

1. The bill provides that non-residents, who supply digital services to individuals, the place of supply of which is in the customs territory of Ukraine, shall be registered as VAT payers.<\/strong><\/p>\n

Para. 12 of the Law amends para. 180.1 of the Tax Code of Ukraine (the TCU) and ascribes a non-resident, who does not have a permanent establishment and supplies digital services to individuals in the customs territory of Ukraine, to the list of taxpayers.<\/p>\n

The provisions of the TCU are also supplemented by Article 208-1, where para. 2 describes the procedure of VAT payer registration for non-resident, who supplies digital services to individuals, the place of supply of which is in the customs territory of Ukraine.\u00a0The obligation to register arises if the amount of income received from transactions provided by such non-resident in the previous calendar year exceeds UAH 1 million.<\/p>\n

The regulation provides that registration of a non-resident may take place remotely \u2013 \u201cin digital form through a special portal solution for non-resident users who provide digital services by means of electronic identification\u201d<\/span>.<\/p>\n

2. The list of digitally supplied services is defined.<\/strong><\/p>\n

The definition and the list of digitally supplied services were also defined for the second reading.\u00a0The text of the bill states:<\/p>\n

\u201cDigitally supplied services<\/strong> are services delivered over the Internet, in an automated manner, by means of information technologies and involving minimal human intervention, including installing a special application or application on smartphones, tablets, TVs or other digital devices.\u00a0These services include, but are not limited to:<\/strong><\/span><\/p>\n

a) supply of electronic copies, provision of access to images, texts and information, including , but not limited to subscription to electronic newspapers, magazines, books, providing access and\/or downloading of photos, graphic images, videos;<\/span><\/p>\n

b) provision of access to databases, including use of search systems and directory services on the Internet;<\/span><\/p>\n

c)supply of electronic copies (electronic-digital information) and\/or provision of access to audio-visual works, video and audio on demand, games, including the supply of services for participation in such games, provision of services for access to television programs(channels) or their packages, except for access to television programs simultaneously with their broadcasting through a television network;<\/span><\/p>\n

d)provision of access to information, commercial, entertainment electronic resources and other similar resources, in particular, but not limited to resources hosted on platforms for sharing access to information or video materials;<\/span><\/p>\n

e) supply of services for online learning on the Internet without human involvement, including provision of access to virtual classrooms, educational resources where students perform tasks online and grades are generated automatically, without human participation (or with minimal participation);<\/span><\/p>\n

f) cloud services for the provision of computing resources, data storage resources or electronic communications systems using cloud computing technologies;<\/span><\/p>\n

g) supply of software and related updates, including electronic copies and access to them, as well as supply of remote support services of software and electronic equipment;<\/span><\/p>\n

h) provision of advertising services via the Internet, in mobile applications, and via other electronic resources, supply of advertising space, including banner advertisements on websites, web pages or web portals\u201d.<\/span><\/p>\n

3. The bill determines the procedure of taxation of digital services provided by non-residents.<\/strong><\/p>\n

In addition to the obligation and procedure for registration of non-residents as VAT payers, Article 208-1 of the TCU defines the tax treatment of non-residents, namely:<\/p>\n