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SDM Partners concerning “Google Tax” and E-sick leaves

29 June 2021

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 June 29, 2021
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Category Announcements

Member of the Union of Industrialists and Businessmen of Turkey and Ukraine “TUSIB” – law Firm SDM Partners has prepared some clarifications on new issues:

  • “Google Tax” Law has passed

On 03 June 2021, the parliament adopted the Draft Law No. 4184 in the second reading, concerning the value added tax of non-residents that provide electronic services in the customs territory of Ukraine.

The new category of VAT payers will be non-residents that do not have a permanent establishment in Ukraine and automatically provide services[1] through the Internet in the customs territory of Ukraine for the supply of texts, images, e-books and magazines, cloud storage, software (updates and services), as well as advertising services (via the Internet, mobile applications, other electronic resources), in case the amount of such services for a calendar year exceeded 1 000 000 ₴.

Such entities will be required to register as a VAT payer by submitting an application to the tax authorities by March 31 of the following year, pay 20% tax (included in the price of electronic services; payment of tax liability in foreign currency is acceptable) and submit a quarterly simplified return.

The place of rendering of electronic services will be determined by the place of registration of the service consumer (if he is registered as a legal entity under the law of Ukraine) or by the SIM-card code / IP address of the device used by the consumer, the location of the provider whose services he uses, the location of the bank from the account of which the consumer paid for electronic services.

In case of refusal (inaction) of a non-resident regarding the obligation to register as a VAT payer in accordance with the draft law, the tax authorities will send a corresponding notification, and then – a tax notification-decision (“TND”) through the competent authorities of the state of registration of such non-resident. The deadline for appealing such notifications and TND is three months.

It is expected that the draft law will cover the activities in Ukraine of such international corporations as Google, Apple, Microsoft, Netflix, Wargaming Group, Bloomberg, Alibaba, Booking.com., and will attract up to UAH 3 billion to the state budget per year.

The draft law is currently expected to be signed by the President.

  • E-sick leaves – the law came into force

On 10 June 2021, the Ministry of Health and the Ministry of Digital Transformation of Ukraine announced the launch of electronic medical reports on temporary work incapacity (sick leaves), which was previously established by the Resolution of the Cabinet of Ministers dated 31 March 2021 No. 323.

During the examination of the patient, the doctor will be able to create the mentioned conclusions and certify them with the help of qualified electronic signature. Such conclusions will be immediately reflected in the electronic register and transferred to the bodies of the Pension Fund of Ukraine (“PFU”), which the patient will be notified about by phone. Employers will also have access to e-sick leaves on the PFU portal.

One is assumed that all health care facilities will switch to e-sick leaves by 01 September 2021. Until then, simultaneously with the introduction of electronic forms, the usual written medical conclusions will also be issued.

[1] At the same time, electronic services for providing software on tangible media, consultations via e-mail, as well as access to the Internet will not be considered.

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