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Ukraine introduces 20% Digital Services VAT

In a bid to increase revenue to Ukraine’s state budget, the Ukranian tax authorities are proposing a 20% VAT on electronic services provided by foreign digital services companies to Ukrainian customers. Companies who provide any electronic services to Ukrainian customers will be forced to register for VAT or risk non-compliance.

The purpose of this Draft Law 2634 sets out to “increase the State Budget revenues from value added tax by attracting non-resident taxpayers providing electronic services to individuals, whose place of supply is located in the customs territory of Ukraine and creating favourable conditions for efficient and non-burdensome business administration and tax-related procedures”.

The tax authorities are still yet to define procedures for foreign companies to register for VAT and electronic filing procedures. The draft law states the following as part of their implementation list:

  • Define a simplified procedure for registration of VAT payers for non-resident suppliers, which can be remotely transmitted electronically on a specially designed web portal;
  • Determine the rules of value added tax accounting for non-residents providing individuals with electronic services, the place of supply of which is located in the customs territory of Ukraine.

Vatglobal is monitoring the situation closely and will be able to provide any digital services providers with assistance with foreign VAT registration and filing in the Ukraine.

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