VAT on digital sales in Ukraine

Ukraine‘s parliament is considering to draft law according to which non-residents that provide electronic services to Ukrainian residents (B2C sales) will be obliged to register for and collect VAT if such taxable sales of electronic services exceeds UAH 1 million per year. The proposed effective date is 1 January 2020.

As per draft law electronic services will include:

• Images or text (photographs are also included);
• E-books and magazines;
• Audio visual works;
• Video;
• Video games;
• Online gambling;
• The transfer of the right to use computer software and related updates
• provision of advertising services on the internet, mobile applications
• provision of access to electronic commercial, educational, and entertainment information.

The services that would not be qualified as electronic services:

• services ordered online, but not provided via internet
• consulting services (by email)
• internet access services
• the transfer of the right to use computer software (e-games as well) and databases on physical carriers;

What would be the consequences of late VAT registration?

Government may apply the fine for late registration or violation of other tax registration requirements in an amount of UAH 510 for the legal entities.

If you have any concerns about VAT in Ukraine, please do not hesitate to contact us.