the “Google tax” steadily replenishes the Ukrainian budget
14 November 09:35
The campaign for the declaration of transactions for the supply of electronic services to individuals by non-residents for the third quarter of 2024 has ended. This was announced by Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, Komersant ukrainskyi reports.
According to the deputy, 123 taxpayers have submitted reports, declaring more than UAH 3.1 billion in tax liabilities (EUR 32.5 million and USD 38.7 million). In the third quarter, 7 new taxpayers were brought to taxation. Compared to the tax accrual for the previous quarter of this year, the declared VAT liabilities for digital services increased by more than 7%.
“It is noteworthy that in addition to the regular leaders in declaring VAT on digital services, Google, Apple, META platforms, VALVE CORP, which declared and paid over UAH 2.2 billion in VAT before the deadline, new companies: UPWORK GLOBAL, SONY, ETSY, paid a substantial UAH 300 million. It is also worth paying attention to the significant increase in accruals from information service providers UBER, UKLON and BOLT, which accrued UAH 89.4 million in tax for the third quarter of 2024, which is more than UAH 20 million more than in the previous quarter,” Danylo Hetmantsev emphasized.
He also singled out service providers in the adult entertainment industry – Only Fans and PornHub, which paid UAH 58.4 million in value added tax in 2024.
What is the “Google tax”?
The official title of the law on the “Google tax” is “On Amendments to the Tax Code of Ukraine on the Abolition of Taxation of Income Received by Non-Residents in the Form of Payment for the Production and/or Distribution of Advertising and Improvement of the Procedure for Taxation of Value Added Tax on Transactions for the Supply of Electronic Services to Individuals by Non-Residents”. It was adopted on June 3, 2021, and came into force on January 1, 2022.
As explained on the DOU.ua website, the law applies to large companies that are not residents of Ukraine, do not have a permanent establishment here, and at the same time provide electronic services to individuals (i.e., ordinary Ukrainians) and individual entrepreneurs via the Internet. Therefore, a conventional Netflix, where Ukrainians watch movies, or Facebook, whose advertising account is used by an entrepreneur, are subject to the law.
According to the innovation, these companies had to register as VAT payers if the amount of services they provided to Ukrainians exceeded one million hryvnias per year.
