Wants to eliminate tax on advertising placed abroad
Ukraine’s Ministry of Digital Transformation plans to eliminate one of the criteria for the tax code – the so-called “tax on foreign advertising”, which has been ordered by Ukrainian companies abroad.
The need to abolish this tax was discussed with Deputy Minister of Digital Transformation Alexander Borniakov and the Chairman of the Ukraine Committee on Finance, Verkhovna Rada, Daniel Getmantsev, representatives of online businesses in Ukraine, on the official website of the Ministry of Digital Affairs accordingly.
“In 1997, a specific tax on advertising services was introduced, in which Ukraine’s legal entities have to pay 20% of the amount to pay Ukraine’s budget, which is an advertisement provided by a non-resident. Spend on services. That is, when ordering advertisements on Facebook or Twitter, companies must pay the contractor for this service – and 20% of the amount – to us. Similarly, if a Ukrainian exporter wants to advertise his products on the foreign market (such as on local television or outdoor advertising), he is forced to pay such services not only to his non-resident contractor, but to the Ukrainian budget. For this an additional 20% tax has to be paid on the cost of such advertisement. “, – explained in the Ministry of Statistics.
The ministry stated that this tax does not have a competitive advantage for the Ukrainian manufacturer, rather it increases the cost of its goods and creates additional barriers for Ukrainian producers to enter foreign markets.
To abolish the tax, authorities plan to introduce an amendment to Daniel Getmuntsev’s bill number 2634 for electronic services by Second Reading, which proposes a list of people who have to pay VAT, Ukraine Provides electronic services to Ukrainians for connecting foreign companies without representative offices in the US.
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We previously wrote that the new Bill No. 2634 proposes to impose a 20% VAT on electronic services provided by Ukrainians to non-resident companies. As an example of successful implementation of the law, its authors cited the experience of Russia, where taxation of companies such as Apple, Google, Microsoft, Netflix, Wargaming, Bloomberg, Alibaba, Booking.com, etc. in 2019 12 billion Brought the treasury of the Russian Federation. Ruble (USD 4.7 billion).
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