Taxi drivers and couriers to prepare: the government approved the law on taxation of income from digital platforms
29 April 17:27
The Cabinet of Ministers has supported the draft law “On Amendments to the Tax Code of Ukraine and Some Other Legislative Acts of Ukraine on the Implementation of International Automatic Exchange of Information on Income Received through Digital Platforms.” This was announced by the government’s representative in the Verkhovna Rada, Taras Melnychuk, "Komersant Ukrainian" reports.
The draft law should harmonize national tax legislation with the law of the European Union and the Organization for Economic Cooperation and Development.
But the main purpose of this law is to promote a significant expansion of the tax base by including individuals whose income is often not taxed.
What innovations does the draft law contain?
According to the draft law, the State Tax Service will be able to automatically receive data from digital platform operators and international bodies on individuals who receive income without registering a private business or using the simplified taxation system. The draft law also provides for liability for failure to provide, untimely or incomplete provision of such information.
LIGA.net, which has reviewed the text of the draft law, notes that operators of digital platforms are proposed to be defined as tax agents and to be obliged to automatically collect tax on the amount of income of an individual – an accountable seller from “reporting activities”: leasing real estate, personal services, selling goods or leasing vehicles.
Income will be taxed at a rate of 5% if the seller meets certain requirements (a bank account opened specifically for reporting activities, no self-employed status, no employees, and annual income from reporting activities not exceeding 834 minimum wages).
Otherwise, the tax rate will be 18%. The same rate is set if the annual income exceeds the established limit of 834 minimum wages (by the amount of the excess).
If a seller has made no more than three sales during a calendar year for a total amount not exceeding the equivalent of EUR 2,000 per year, such a person has the right not to open a separate account but may use the existing ones.
When opening a current account for an accountable seller, the taxpayer must provide the bank with consent to the bank’s disclosure of information containing bank secrecy.
Who will be affected by the law
The draft law states that the following activities are subject to taxation
– leasing of real estate, including residential and non-residential real estate, as well as any other real estate and parking spaces
– personal services
– sale of goods;
– leasing of vehicles.
Thus, the law, if adopted, will apply to such companies as OLX, Prom, LUN, Kabanchik.ua. Self-employed couriers, taxi drivers, landlords, i.e. those who earn money by providing services through platforms such as Bolt, Uklon, Booking, or Glovo, may be subject to taxation.
What explains the expediency of adopting the law
According to the current tax legislation, all those who are registered on electronic platforms and provide certain services, such as taxi ordering, food delivery, search for contractors and various specialists, must declare their income and pay taxes on it – 18% personal income tax and 5% military duty. Almost no one does this, and the State Tax Service’s ability to control such taxpayers is extremely limited.
However, as MP Danylo Hetmantsev explained in an interview with Mind.ua, this does not mean that every taxpayer who receives income but does not report it and does not fulfill tax obligations is not under constant threat of liability.
According to Danylo Hetmantsev, Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy, the state budget will be able to receive up to UAH 10 billion a year in additional revenues after digital platforms receive the status of tax agents.
