Tax on Google in digital Ukraine: review of changes

On June 3, 2021, the Ukrainian parliament adopted a law that obliges an international Internet company, without registration in the country, to work with the payment of value added tax VAT - 20 percent. It is calculated based on the income that it receives by providing services to citizens of the country. The media is calling the bill the "Google Tax". Let's consider its features in more detail.

The main provisions of the law on the "tax on Google"

The new bill is an addition to the Tax Code, which relates to the activities of non-resident companies that provide a number of services in the Digital sphere. This includes: advertising, delivery of video and audio content, work with software, storage, photo processing, etc.

The main provisions of the advertising tax include:

• An international Internet company that operates in the information field of Ukraine and makes a profit on the network type of advertising operations is obliged to pay VAT;
• Registration of non-residents takes place in accordance with the established procedure as tax payers. Indicate the base, payment terms, reporting option;
• Organization of the procedure for sending notifications of taxes for non-residents;
• Possibility of remote payment in a comfortable currency;
• The exact list of services that are taxed is indicated;
• No registration of tax invoices is allowed;
• A certain place is fixed where electronic services can be provided;
• Date of service - the date of drawing up an agreement between the company and customers in the online version.

Registration of non-residents as taxpayers is carried out according to a simplified procedure; for this, the work of a special web portal is thought out.

The bill was designed to fill the state treasury, and its adoption provides significant amounts in addition to the budget.

Can I be exempt from paying VAT?

The Google tax bill provides for a number of exemptions for the following services:

• Operations related to distance learning via the Internet. It is the only acceptable means of communication for the student and teacher;
• Provision of services in the field of education. This includes the preparation of those wishing to receive higher education, access to information and training resources posted on the World Wide Web.

The Google tax law came into force, and the reporting (tax) period begins on January 1, 2022.

For ordinary, domestic users, there are no changes in the use of the web and the Google search engine. As before, all features are free. At the same time, expert commissions talk about negative aspects: the state will invest huge sums in organizing the work of the tax registration service for non-residents. Similar projects for Ukraine are innovations. The position of unregistered international companies should also be taken into account, which are already significantly reducing the lists of their services or increasing the cost for Ukrainians, putting 20% ​​into it for paying tax. The financial costs are thus borne by ordinary users.