Foreign companies that supply electronic services to individuals will be required to register as VAT payers under a simplified procedure through a special electronic service if the total volume of relevant operations exceeds UAH 1 million per year. Non-residents will prepare simplified reports in electronic form in Ukrainian or English.
The Law of Ukraine No. 1525-IX of June 03, 2021 “On Amendments to the Tax Code of Ukraine Regarding Abolition of Taxation of Revenues Received by Non-Residents from Production and/or Distribution of Advertising and Improvement of Value Added Tax Administration Procedures as it Pertains to the Operations on Electronic Services Provision to Individuals by Non-Residents” (Law 1524) establishes VAT rules for operations for the supply of electronic services by non-residents to individuals. It is also called the Google, YouTube, Facebook and other foreign electronic services tax law.
At the same time, operations involving the supply of distance learning services via the Internet are exempt from VAT if this network is used exclusively as a means of communication between the teacher and the student.
Also, operations for the supply of educational services through access to public educational, scientific and information resources on the Internet from the branches of knowledge and specialties in which higher education applicants are trained are exempt from VAT if their implementation and provision do not require human participation.
Starting from January 1, 2022, VAT will be abolished when Ukrainian companies pay for services related to the production or distribution of advertising abroad.
In addition, Law No. 1525 introduced an important clarification to clause 187.1 of the Tax Code of Ukraine (hereinafter – the TCU), which determines the date of occurrence of tax liabilities. It stipulates that for documents drawn up in electronic form, the date of registration of the document certifying the fact of delivery of services by the taxpayer shall be considered the date indicated in the document itself as the date of its compilation, regardless of the date of electronic signature.
The Law entered into force on July 2, 2021, except for certain amendments that will come into force from January 1, 2022.
The provisions of certain clauses of the Law (Regarding the VAT Administration Procedures as it Pertains to the Operations on Electronic Services Provision to Individuals by Non-Residents) will apply to tax periods starting from January 1, 2022.