Ukrainian «Google tax»  to rank among the top rates globally.

Nina Bets, Head of Tax Practice, Ilyashev & Partners Law Firm

The Verkhovna Rada of Ukraine has adopted, in the first reading, the draft law No. 4184 on application of VAT to the transactions pertinent to making available electronic services to private individuals by non-residents. This applies to the companies that do not have permanent representations on the territory of Ukraine and provide their electronic services over the Internet.

What shall come at a price?

How much shall Google, Netflix, Amazon, Youtube, Facebook and other international players have to pay for providing services to Ukrainian residents and what articles shall be included?

The following services may become taxable:

  • making available images or texts, including photographs, e-books and e-magazines;
  • making available audiovisual works, video on demand, games, gambling frameworks, including participation in such games;
  • granting access to information, either commercial, educational or entertainment, both to electronic and other similar resources;
  • making cloud technologies for data storage available for use;
  • making available (granting the rights for use) software and updates to it, as well as remote maintenance of software and electronic equipment;
  • provision of advertising services on the Internet, within mobile applications and on other electronic resources.

In fact, this means that all premium mobile applications, entertainment services, academic materials, books, software and advertisements shall simply become 20% more expensive, that is the applicable VAT rate.

VAT for non-residents

The plan is to set up a specially designed web portal in order to register non-residents as VAT payers. This portal shall feature facilitated registration and declaration submission procedures. The companies in question shall be able to clear their tax liabilities in a variety of applicable foreign currencies. A non-resident company shall be under the obligation to register as a VAT payer, if it sells electronic services in Ukraine worth more than UAH 1 million annually. If this requirement is not complied with, then the company in breach would become exposed to a penalty worth 100% of the provided services value. Tax assessment notices pertinent to imposing a penalty and the obligation to register as VAT payer shall be sent by Ukrainian controlling bodies to competent authorities of a foreign state, where the appropriate non-resident is registered, so that these authorities sanction the necessary actions.

Ukrainian fiscal authorities shall also become privileged to conduct inspections of those non-residents, who are subject to VAT. Such inspections shall be conducted according to a facilitated procedure by sending requests for retrieving fiscal information by means of electronic communications within the electronic service, entitled “VAT for non-residents”. The appropriate notices shall be immediately sent to electronic address, indicated by a non-resident when registering as a tax payer. Responses to such electronic requests must be provided by non-resident entities within 30 days.

Fiscal authorities shall be able to track whether certain services were actually provided to Ukrainian residents based on the information about their whereabouts, particularly, based on:

  • country code inherent with a SIM card, used by an electronic service user;
  • whereabouts of a telecommunications provider, whose services a recipient would use in the process of obtaining an electronic service;
  • whereabouts of a device used by an electronic service user that is determined using its IP address;
  • whereabouts of a bank or other financial institution, where an account is open that is used to make payments for electronic services;
  • information about the place of residence, provided by an electronic service recipient.

International practices

The so-called “Google tax” has already been imposed in more than 60 countries worldwide. In France, the “Google tax” goes by the name GAFA (Google, Apple, Facebook, Amazon) and is imposed on the companies at the rate of 3% of their revenues, whereas in Great Britain this tax is rated at 2% of the corporate revenue. In the USA it is called the “digital tax” and is deductible at the rate from 1 to 7% depending on the state. In Canada, depending on the province, the rate of similar tax varies from 6 to 9%. In Poland, the discussions regarding imposition of such tax at the rate of 5% are still underway. The retrieved proceeds shall be used purposefully to finance health care services, promote culture and the national heritage. In Russia, such tax is also deductible as the VAT and it rates at 18% of the appropriate service cost.

Not only do rates of the “Google tax” vary in different countries across the globe, but similarly the procedures of its management. Thus, in Uzbekistan, Taiwan, Serbia, Nigeria, Paraguay, New Zealand, Japan, India, Indonesia, Belarus and Albania a non-resident company is under the obligation to assign its tax agent for the purpose of managing its tax liabilities. In the EU, a special-purpose web portal has been set up, which is entitled MOSS (Mini One-Stop Shop). MOSS users do not need to register as tax payers in each particular country across the EU, but they have an opportunity of submitting tax declarations and paying the VAT in a centralized manner. There are also the states like Ukraine that use their generically developed web-based systems. For instance, South Korea offers non-resident tax payers to sign up for Hometax — the automated tax management platform.


The intention to collect more budget proceeds by putting hand in the pockets of large transnational corporations shall obviously end up in simply relaying extra margin costs to regular users of services, provided by such corporations. Luckily, the use of social networks or search engines in an ordinary course of action have not been affected by the above draft law in any way. So far, so good.


News about recent political developments in Ukraine, key Ukrainian economic news and major current events in the CIS and the rest of the world.

Trainer responds to Kentucky Derby winner Medina Spirit failing drug test.

Trainer responds to Kentucky Derby winner Medina Spirit failing drug test.

Hall of Fame trainer Bob Baffert said Sunday that his barn has been told Kentucky Derby winner Medina Spirit failed a postrace drug test. In a Sunday morning press conference at Churchill Downs, Baffert said Medina Spirit was found to have 21 pico...

Congresswoman Liz Cheney likely to be ousted as Republican Conference Chair.

Congresswoman Liz Cheney likely to be ousted as Republican Conference Chair.

House Republicans are expected to vote Wednesday to remove Congresswoman Liz Cheney of Wyoming as the party's conference chair. It follows an ongoing feud between Cheney and former President Trump. Tyler Pager, White House reporter for The Washing...

BREAKING: Dodds sacked as Starmer reshuffles Labour cabinet.

BREAKING: Dodds sacked as Starmer reshuffles Labour cabinet.

Labour leader Sir Keir Starmer has wasted no time replacing his front bench following the party's dismal election results. The changes include: -Anneliese Dodds sacked as shadow chancellor and replaced by Rachel Reeves -Angela Rayner will become s...

Russia Displays Military Might in Annual Victory Day Parade - NBC News.

Russia Displays Military Might in Annual Victory Day Parade - NBC News.

Russia celebrated the 76th anniversary of the defeat of Nazi Germany with a display of military might and pomp in Moscow. 12,000 troops and 80 aircraft took part in the Victory Day parade, which was overseen by President Putin as relations with th...

Press Preview:  Take a look inside Monday's newspapers.

Press Preview: Take a look inside Monday's newspapers.

Find out what's inside Monday's newspapers with Matthew Syed and Christina Patterson. SUBSCRIBE to our YouTube channel for more videos: Sky News videos are now available in Spanish here/Los video de Sky News están disponibles en español aquí Follo...

Influencer who once shunned COVID shot now promotes vaccinations.

Influencer who once shunned COVID shot now promotes vaccinations.

An influencer who pushed anti-vaccine messages is now publicly promoting her COVID-19 vaccination to make up for the misinformation she spread during her movement. Heather Simpson, a freelance writer and activist, joins CBSN's Lana Zak to discuss ...