Internet providers defend the right to operate under the simplified taxation system
20 March 09:42
The Internet Association of Ukraine and the Association of Rights Holders and Content Providers, as authorized representatives of small and medium-sized businesses in the field of electronic communications in Ukraine, have appealed to the members of parliament of Ukraine to take under parliamentary control the issue of restoring the right of Internet service providers to be single tax payers of the third group. This was reported by the Internet Association of Ukraine, Komersant ukrainskyi reports.
The statement emphasizes that the State Tax Service’s restrictions on the use of the simplified taxation system by Internet access service providers leads to an imbalance in the activities of the entire electronic communications industry, harms the sustainability of communication services and, in fact, threatens the national security of Ukraine.
The Internet Association of Ukraine considers this situation to be “artificially created” and draws attention to numerous violations in the process of tax audits and decision-making. This is also confirmed by court practice.
As reported in the appeal, as of March 5, 2025, 189 proceedings have been opened in the administrative courts of Ukraine on claims of Internet access service providers to cancel the decision of the tax authorities to revoke the single tax payer certificate, and the number of open cases is constantly growing. Administrative courts of Ukraine of first instance considered 110 cases and made 99.98% of decisions in favor of single tax payers. Currently, 13 decisions have entered into force after review by the administrative courts of appeal.
One of the providers who defended their right in court is Telenavigator LLC
The day before, Ekonomichna Pravda briefly recounted the history of this trial.
on June 28, 2024, the Main Department of the State Tax Service in Dnipropetrovs’k region conducted an audit of the legality of the company’s stay on the simplified taxation system. As a result, they issued an act stating that Telenavigator had no grounds to be in the register of single taxpayers of the third group. Based on this act, the State Tax Service removed the company from the register on July 1, 2024.
In August 2024, Telenavigator filed a lawsuit against the State Tax Service in the Dnipropetrovs’k District Administrative Court. In the lawsuit, the provider asked to declare the decision to exclude it from the register unlawful and cancel it.
on October 11, 2024, the Dnipropetrovs’k District Administrative Court upheld the claim, canceling the decision of the State Tax Service.
This was followed by the reversal of this decision by the Administrative Court of Appeal on January 30, 2025, and then the company filed a cassation appeal with the Supreme Court. The Supreme Court partially satisfied Telenavigator’s appeal, but upheld the main conclusion that the STS’s actions were unlawful.
Why Internet service providers are on the radar of the tax authorities
In the middle of last year, proposals addressed to providers to move from the “gray” Internet market in Ukraine to the legal business plane were particularly persistent. Tax authorities began to back them up with actions.
The Ekonomichna Pravda publication recalls in this regard a publication in one of the editions of the Parliamentary Finance Committee by Danylo Hetmantsev, who claimed that providers use “gray” schemes, and the state does not receive large revenues from taxes and other payments. And all because of the simplified taxation system.
“Due to the existence of a simplified taxation system for the provision of Internet access services, the state loses more than UAH 3 billion a year,” the MP wrote.
The MP then expressed a wish that the “gray market” of the fixed Internet would hear this signal.
First of all, this signal was heard by the tax authorities, and then by the providers.
What were the consequences?
After the State Tax Service, in his words, “began to destroy the small business of Internet providers,” Oleksandr Fedienko, chairman of the cybersecurity subcommittee of the Parliamentary Committee on Digital Transformation, asked the National Commission for the State Regulation of Communications and Information Technology, the regulator that deals with the issues of Internet providers and maintains the relevant register, how many entities that provided Internet access services had ceased operations.
“The answer we received was not just stunning! It was shocking. 1316 entities have been removed from the regulator’s register, i.e., ceased to exist. I don’t know where they went, we can assume that some of them closed down, some went into the shadows, and left the regulator’s supervision. But these are people! These were self-employed citizens of Ukraine. And these are only the first consequences of the tax authorities’ thoughtless actions,” the MP wrote.
Judging by the fact that the Internet Association of Ukraine is once again appealing to the people’s deputies of Ukraine to take the issue of restoring the right of Internet service providers to be single tax payers of the third group under parliamentary control, the story continues.
