Ukraine has introduced a requirement for non-resident companies to register as VAT payers since January 1st, 2022. This requirement concerns companies that provide digital services, it is the so called “Google Tax” law.
Foreign companies must register as VAT payers in Ukraine if all of the following conditions are fulfilled:
– The foreign company (non-resident) does not have a permanent establishment in Ukraine;
– The foreign company (non-resident) supplies digital services to individuals (citizens) or private entrepreneurs (not VAT payers) within the territory of Ukraine;
– The sum of all the supplies for the year 2021 exceeds UAH 1 000 000 (one million).
Digital services mean services that are provided through the Internet. The Tax Code mentions for example provision of cloud services, software and updates supply, advertising services, access to the use of search engines, and electronic entertainment resources as examples.
The registration process itself happens mostly on-line, but not entirely. The Ukrainian tax authorities have created an electronic cabinet which allows the applicant to provide relevant information for the registration online. However, this information must be later confirmed by sending paper copies to the authority. These documents include a registration form and the registering non-resident entity´s extract from the company register in their home country.
After the registration, it is necessary to do VAT accounting in Ukraine. The non-resident needs to submit a simplified VAT return, which is submitted electronically within 40 days after the end of each quarter. There is an opportunity to pay the resulting taxes in Ukraine in EUR or USD.
Some electronic services are exempt from VAT, these include for example:
– Supply of goods and services that are ordered through the Internet but delivered without using the Internet;
– Supply of non-digital goods and services which may include digital services in some degree, if the cost of the digital part of services is included in the goods or services´ total cost
– Provision of remote learning services, where Internet is the only means of communication in providing the services
Currently non-compliance with the registration requirement entails a fine of UAH 195 000.
