President of Ukraine Volodymyr Zelensky signed the law On Amendments to the Tax Code of Ukraine regarding the abolition of taxation of income received by non-residents in the form of payments for the production and/or distribution of advertising, and improvement of the taxation procedure for value added tax transactions for the supply of electronic services by non-residents to individuals No. 1525-IX, which the Verkhovna Rada adopted on June 3. The website of the head of state reports that the document defines a special taxation procedure for value added tax of non-resident companies that provide electronic services to persons residing in Ukraine.
“This will allow increasing state budget revenues from VAT. Such taxation rules are already becoming a common practice in foreign countries, for example, in the countries of the European Union, Australia, Belarus, Kazakhstan, and the like,” it said.
It is reported that foreign companies that supply electronic services to Ukrainians will be required to register as value-added tax payers using a simplified procedure through a special electronic service if the total amount from the implementation of the relevant transactions exceeds UAH 1 million per year. Non-residents will fill out simplified statements in electronic form in the state or English language.
At the same time, according to the document, transactions for the supply of distance learning services via the Internet are exempted from VAT if this network is used exclusively as a means of communication between a teacher and a student. Also, transactions on the supply of educational services by access to public educational, scientific and information resources on the Internet from the branches of knowledge and specialties in which the training of applicants for higher education is carried out are exempted from value added tax, if their implementation and provision does not require human participation.
From January 1, 2022, Ukrainian companies which pay for services for the production or distribution of advertising abroad, will be exempted from VAT.
The total amount of applications for budgetary value added tax (VAT) refunds in December exceeds UAH 14 billion, and it will be financed on time, said head of the State Tax Service Oleksiy Liubchenko.
“In December, we have full understanding that the application for UAH 14.1 billion will be given to payers, which didn’t happen in December 2019,” Liubchenko said on the air of Savik Shuster’s program Freedom of Speech (Svoboda Slova) on Friday.
He noted that following the results of 11 months of this year, applications for budgetary VAT refunds amounted to UAH 122.7 billion, while UAH 128 billion was reimbursed during this period.
The Verkhovna Rada has ratified the protocol with amendments to the convention with Austria for avoidance of double taxation and prevention of tax evasion with respect to taxes on income and property.
The Ministry of Finance said on its website the protocol provides for an increase in the general tax rate of dividends from 10% to 15% and interest from 2% to 5%.
“Increased were also the rates of royalties paid for the use of any copyright on scientific work, patent, etc. from 0% to 5%, for the use of copyright on literary works or works of art from 5% to 10%,” the Ministry of Finance said.
In addition to the increase in rates, it is envisaged to supplement the convention with new articles on limiting the possibility of applying the preferential provisions of the convention, if the main purpose is to obtain such benefits, and on expanding the ability of the competent authorities of Austria and Ukraine to exchange tax information.
“These changes and rates correspond to the general practice of Ukraine’s conclusion of such agreements and protocols to them with other countries of the world – similar rates are contained in most of the conventions and protocols to them, concluded by our state,” the ministry explained.
Financial results of taxation of ukrainian
enterprises by type of economic activity (UAH million)
