A bill foreseeing the introduction of value added tax (VAT on services of nonresident companies providing electronic services online, like Google, Facebook, Apple, Adobe, and Netflix, has been registered in the Verkhovna Rada of Ukraine.

As reported on the website of the Ukrainian parliament, bill No. 2634 on amendments to the Tax Code of Ukraine regarding imposing value added tax on electronic services delivered by nonresidents to individuals, the place of delivery of which is located in the customs territory of Ukraine was submitted to the Verkhovna Rada on December 19, 2019. The author of the bill is MP from the Servant of the People parliamentary faction Danylo Hetmantsev.

In an explanatory note to the bill, Hetmantsev said that the provision of electronic services by nonresident companies to individuals who do not have the status of a business entity does not allow for the effective implementation of VAT taxation rules, which leads to losses in the national budget and creates a non-competitive environment for resident payers.

"In turn, the establishment of special rules for the taxation of VAT on electronic services is becoming common practice in foreign countries, for example, in the countries of the European Union, Australia, Belarus, Kazakhstan, Russia and other countries," the author of the bill writes.

As a result, this bill proposes: to determine the list of electronic services; include nonresidents in the list of VAT payers; establish rules for determining the place of delivery of electronic services (B2C), the form and the specific procedure for sending a tax notice to a nonresident and complaints about such a decision.

In addition, it is proposed to define a simplified procedure for the remote registration of nonresident suppliers as a VAT payer in electronic form on a specially developed web portal and to free them from the obligation to register tax invoices.

Hetmantsev said that electronic services include the supply of images or texts, electronic books and magazines, audio, video, games, gambling, software, as well as the provision of advertising services and access to information, commercial, educational and entertaining electronic resources and cloud technologies.