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Ukraine Releases Summary of Tax Consultation on VAT Treatment of Software Products

The Ukraine Ministry of Finance has released a summary of guidance in the form of a tax consultation on the VAT treatment of software products.

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The Ministry of Finance has Released Summarizing Tax Consultations on the Taxation of Software Products

Ambiguous interpretation of tax legislation causes tax disputes between taxpayers and controlling authorities. To resolve these disputes, the Ministry of Finance uses the mechanism of tax clarifications - Summarizing Tax Consultations, prepared taking into account the recommendations and proposals of the Expert Council on the preparation of the Summarizing Tax Consultations under the Ministry of Finance.

The Ministry of Finance approved the Order on Summarizing tax consultations on certain issues of value-added tax (VAT) on the supply of software products.

What's it about?

The consultation provides an answer to the question of whether transactions for the supply of various types of software products will be exempt from VAT.

In particular, it has been clarified that operations to supply and access computer programming results in the form of Internet web-sites and/or online services, in the case of the transfer of intellectual property rights to such objects to the customer, will be exempt from VAT taxation.

At the same time, operations for the supply of systems and/or equipment, component of which is software products without the allocation of its separate value are subject to VAT under the generally established procedure.

For reference

Adoption at the end of 2016 of the law "On Amendments to the Tax Code to Improve the Investment Climate in Ukraine" allowed the Ministry of Finance to expand the ability to release summarizing tax consultations.

On September 27, 2017, the Ministry of Finance issued an Order approving the Procedure for releasing the Summarizing Tax Consultations. This Order provided for the creation of an advisory and consultative body under the Ministry of Finance - the Expert Council.

The Order of the Ministry of Finance dated 23.06.2020 No 321 approved the renewed composition of the Expert Council for the preparation of Summarizing tax consultations under the Ministry of Finance of Ukraine.

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