VAT Friday: Ukraine – VAT on digital goods and services

The Ukrainian Parliament passed in the first reading a Draft Law on the introduction of the EU modelled legislation on VAT on digital goods and services.

Background:

On 17 February 2021 the Ukrainian Parliament passed in the first reading a draft law introducing VAT on the following electronic supplies to Ukrainian customers:

•Visuals and texts, including photo, electronic books and magazines •Audio and visual content

•Betting and gambling services

•Providing access to databases, commercial, educational and similar recourses

•Cloud server services;

•Electronic supply of software

•Advertising services on internet, mobile applications and other similar platforms

Under the proposed law the supplier of such services should register with the Ukrainian tax authorities and submit tax returns in case the volume of the taxable supplies exceeds UAH 1 million in a calendar year. This is roughly EUR 30,000.

It is expected that the VAT regime on electronic goods and services will come into effect as of 2022. The applicable rate will be 20%.

To Do:

Suppliers to Ukrainian residents should review their current procedures and prepare for the amendments. Registration and paying VAT in Ukraine may become mandatory from 2022.

For questions please contact Crowe Ukraine: [email protected] or [email protected]