Government launches a new era of taxation of digital platforms: what will change for business

The government has approved a draft law on the introduction of international tax information exchange for digital platforms. The document envisages preferential taxation, new reporting requirements, and harmonization with EU regulations. Find out more about what it means

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The Cabinet of Ministers of Ukraine has taken an important step towards the country's integration into the international tax community - the government has approved a draft law amending the Tax Code to introduce an international automatic exchange of information on income received through digital platforms. This was reported by the press service of the Ministry of Finance.

Ukraine introduces international reporting standards for digital platforms

The draft law provides for the implementation of the model rules of the Organization for Economic Cooperation and Development (OECD) and the provisions of EU Directive 2021/514 (known as DAC 7). These changes are necessary for Ukraine's accession to the DPI MCAA, which is already in force in 29 countries, mostly in the European Union.

The draft law aims to harmonize Ukraine's tax legislation with European standards, increase transparency of income received through digital platforms, and fight the shadow economy.

Innovations in the Tax Code

As part of the draft law, a new article will be added to the Tax Code that will regulate

- rules for identifying and verifying users of digital platforms;

- requirements for submission of reports by platform operators to the State Tax Service;

- the mechanism for transferring information on the income of sellers to government agencies.

Preferential taxation

One of the key elements of the draft law is the introduction of a preferential tax rate of 5% on personal income received through digital platforms. The platform operator will act as a tax agent, which will simplify tax administration.

Preferential taxation will be applied only to taxpayers who meet the following conditions:

- are tax residents of Ukraine;

- have opened a special bank account for making payments;

- are not self-employed;

- do not have employees;

- do not exceed an annual income of 834 minimum wages (approximately UAH 6.7 million);

- do not sell excisable goods.

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Simplification for small sellers

Small sellers who have made no more than three sales during the year for the amount of up to EUR 2,000 are subject to simplified conditions. In this case, you do not need to open a special account - you are allowed to use your personal account. The tax rate remains at 5%.

Why is it important?

The adoption of this draft law fulfills several strategic objectives at once:

- Ensures the implementation of structural beacon No. 23 of the Memorandum with the International Monetary Fund;

- harmonizes Ukrainian legislation with the norms of the European Union;

- implementing international tax standards;

- promotes revenue transparency and combats tax evasion.

According to Taras Melnychuk, the government's representative in parliament, the document is an important step towards fulfilling Ukraine's international obligations as an EU candidate country and OECD member.

Thus, Ukraine is taking another step towards integration into the European economic area while creating a transparent and fair tax environment for the digital economy.

How should businesses act in the new environment?

The new tax rules for digital platforms are not only about compliance with the law, but also about the opportunity to optimize financial processes. To adapt to the changes and avoid risks, it is important to have a reliable partner in tax matters.

Law firms specializing in tax law can help you

- assess whether your business is subject to the new requirements;

- prepare reports in accordance with the new standards;

- minimize tax risks and avoid fines.

Professional business lawyers are your allies in the age of digital transformation. Contact us now for a consultation to stay one step ahead.

We remind you! A new study shows that our country is inferior to Poland in terms of simplicity of regulatory procedures. We told you how Ukraine compares to other countries in terms of regulatory burden, why starting a business is more difficult but running a business is easier, and what reforms could improve the situation.

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