Law project about new taxes on OLX, Rozetka, Prom and LUN published

The Cabinet of Ministers of Ukraine has approved a bill providing for the automatic exchange of tax information between Ukraine and EU countries on income received through digital platforms. The initiative is aimed at bringing Ukrainian legislation into line with the requirements of the European Union and the Organization for Economic Cooperation and Development (OECD), which are part of Ukraine’s international commitments as a candidate country for EU accession.

This was announced by the government representative in the Verkhovna Rada Taras Melnychuk. Meanwhile, Deputy Chairman of the Committee on Tax and Customs Policy Yaroslav Zheleznyak published the full text of the bill.

According to the document, digital platform operators will be recognized as tax agents. They will automatically collect taxes from the income of Ukrainian residents who sell goods or provide services through such platforms. The tax rate will be 5% plus an additional 5% military tax. The innovation will apply to both Ukrainian and foreign platforms if they are used by Ukrainian citizens to generate income.

The bill applies to the rental of residential and non-residential real estate, household services, sale of goods and rental of vehicles. Active sellers will be those who have made at least one transaction during the reporting period and received remuneration for it.

It is also envisaged that the tax office will have the right to receive information about transactions on sellers’ accounts if they fall under the new law. If an individual makes more than three sales a year on the platform or receives income over 2,000 euros, he will be required to open a separate bank account for such transactions.

If adopted, the law will apply not only to such trading platforms as OLX, Prom, Rozetka or LUN, but also to transport services, including taxis Uklon, Uber, etc. The exchange of information will take place within the framework of an international system, which currently includes more than 29 countries.

As previously noted by the head of the parliamentary financial committee Danylo Getmantsev, the digital platform market in Ukraine covers hundreds of thousands of working people. According to estimates, annual tax revenues from the new system could amount to about UAH 10 billion. By analogy with the “Google tax”, actual revenues could even exceed initial forecasts.