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12 October 2020

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Ukraine Parliament Considering Draft Law for VAT on Electronic Services Supplied by Non-Residents

The Ukraine parliament is considering draft Law 4184, which was received on 2 October 2020 and provides new rules for the collection of VAT on electronic services provided by non-residents. This includes that a non-resident who does not have a permanent establishment in Ukraine and supplies electronic services to individuals in Ukraine will be subject to VAT on their supplies and required to register.

The requirements would apply where revenue from the provision of electronic services to individuals in Ukraine exceeds the equivalent of UAH 1 million in the previous calendar year as per the official exchange rate of the National Bank of Ukraine on 31 December of the year. Voluntary registration is also allowed where the revenue threshold is not met but is expected to be met.

Supplies of electronic services defined in the draft law include, but are not limited to:

  • the supply of images or texts, including photos, e-books, and magazines;
  • the supply of audiovisual works, custom videos, games, gambling, including the supply of services for participation in such games;
  • the provision of access to information, commercial, educational, and entertainment electronic resources, and other similar resources;
  • the provision of cloud technologies;
  • the supply of (transfer of rights to use) software and updates, as well as remote servicing of software and electronic equipment; and
  • the provision of advertising services on the Internet, mobile applications, and other electronic resources.

The draft law also includes provisions for the registration of non-resident electronic service providers, including provisions for issuing notices to non-resident providers of their need to register, which must be complied with within three months. Further, provisions are included for simplified VAT returns for non-resident providers, which would be required to be filed on a quarterly basis.

As drafted, the VAT requirements would apply from 1 January 2022.

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