Ukraine’s State Fiscal Service issued clarifications on VAT rules for electronic services and tax rates for advertising income. The clarification includes:
1. A definition of a electronic service as the “service that is provided over the Internet automatically, using information technology and preferably without human intervention, including installing a special application or application on smartphones, tablets, televisions or other digital devices”.
2. A list of electronic services provided by CVP:
- providing electronic copies, providing access to images, texts and information, including, but not limited to, subscribing to electronic newspapers, magazines, books, providing access to and / or uploading photographs, graphics, videos;
- providing access to databases, including the use of search engines and directory services on the Internet;
- the supply of electronic copies (electronic digital information) and / or the provision of access to audiovisual works, video and audio works to order, games, including the provision of services for participation in such games, the provision of services for access to television programs (channels) or their packages, in addition to access to television programs simultaneously with their broadcasting through the television network;
- providing access to information, commercial, entertainment electronic resources and other similar resources, in particular, but not limited to, hosted on platforms for sharing access to information or video materials;
- the provision of distance learning services on the Internet, the provision and provision of which does not require human participation, including by providing access to virtual classrooms, educational resources in which students complete tasks online, and grades are issued automatically, without human participation (or with minimal her participation);
- provision of cloud services in terms of providing computing resources, storage resources or electronic communications systems using cloud computing technologies;
- supply of software and updates to it, including electronic copies, providing access to them, as well as remote maintenance of software and electronic equipment;
- provision of advertising services on the Internet, mobile applications and other electronic resources, provision of advertising space, including by placing banner advertising messages on websites, web pages or web portals
3. A proof of payment for electronic services is a proof of a supply of such a service by the non-residents.
4. The place of supply is where the recipient of services is located.
5. Distance Learning is VAT Exempt.
6. Payments to non-residents for the production and / or distribution of advertising are taxed from January 1, 2022
- Until January 1, 2022, residents pay a tax rate of 20% for the production and/or distribution of advertising made by non-resident payments. Such payment is at the resident’s own expense.
- After January 1, 2022, the non-residents producing and/or distributing the advertisements in Ukraine, pay a tax rate of 15%. Such payment is at the non-resident’s own expense.