The Verkhovna Rada on June 3 adopted at the second reading and in general a draft law on amendments to the Tax Code to introduce value-added tax on digital services provided by global tech giants.
The bill No. 4184 saw support of 283 people’s deputies with the required minimum of 226 votes.
The memo to the new legislation says the provision of electronic services by non-resident companies to individuals does not effectively allow enforcing the rules of VAT taxation. This leads to budget losses and creates a non-competitive environment for resident payers.
This violates the basic principles of equality and neutrality for taxpayers, the memo reads.
It also argues that quite a lot of countries have already obliged non-residents to pay value-added tax on the sale of digital services. This is about tech giants, including Apple, Google, Microsoft, Netflix, Wargaming Group, Bloomberg, Alibaba and Booking.com.
“In turn, establishing special rules for VAT taxation of electronic services is becoming a common practice in other countries, for example, in the countries of the European Union, as well as in Australia, Belarus, Kazakhstan, Russia, etc.,” the memo says. (UNIAN/Business World Magazine)
