The Ministry of Finance is planning to oblige operators of digital platforms to report to the tax service on the income of their users. This requirement is to be extended to various online services offering taxi services, real estate rental, marketplaces and applications for the sale of goods and services.
Thus, operators of such digital platforms will have to collect certain information about their users. Then, they will have to submit an annual report to the State Tax Service of Ukraine on the income received by individuals and legal entities from certain types of activities. Thus, operators will become a kind of tax informant.
Deputy Minister of Finance Svitlana Vorobey discussed with representatives of digital platform operators the concept of introducing such additional reporting on users’ income. According to the Ministry of Finance, Ukraine is taking active steps towards the consistent implementation of international standards on transparency and information exchange to harmonize its national tax legislation with EU law.
«The introduction of reporting by digital platform operators will help harmonize national tax legislation with EU law and improve taxpayers’ tax culture,» Svitlana Vorobey said.
It is noted that the Ministry of Finance is taking preparatory measures to ensure that Ukraine joins the international automatic exchange of information on income received through digital platforms. In the future, the State Tax Service will send income reports of reporting non-resident sellers to the competent authorities of partner jurisdictions that are parties to the relevant agreement. Currently, 26 countries are parties to the Multilateral Agreement of Competent Authorities on the Automatic Exchange of Information on Income Earned through Digital Platforms (Multilateral DPI Agreement), the vast majority of which are EU member states.
A prerequisite for Ukraine’s accession to the Multilateral DPI Agreement is the implementation of the OECD Model Rules on the Reporting of Digital Platform Operators and Council Directive (EU) 2021/514 of March 22, 2021 amending Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC 7) into national tax legislation.
The CMU only mentions the transfer of information on the income of platform users to the competent authorities of partners. It is not yet known how the STS will use information on the income of Ukrainian platform users. It is logical to assume that based on the results of reports from digital platform operators, the tax service will be able to check whether Ukrainians pay taxes on income received through such platforms. And if, based on the results of the annual declaration, the income is not reflected in the declarations, then violators may face fines.
Source: CMU