People won’t notice any changes at all: Getmantsev explained how the “Law on OLX Tax” will affect Ukrainians
12 June 18:23
Most Ukrainians will not be affected by the new provisions of the law on the taxation of income earned through digital platforms. This was stated in an interview with the Press Service of the Verkhovna Rada by Danylo Getmantsev, Chairman of the Committee on Finance, Tax and Customs Policy, according to "Komersant Ukrainian".
“People won’t feel any changes at all. Ask yourself: how much did you sell through some platform last year? We have statistics: more than 95% of citizens sell goods worth less than 2,000 euros over the course of a year. In other words, ordinary citizens who do not engage in trade on a regular basis will not feel any changes at all,” Getmantsev stated.
According to him, this law is even beneficial for Ukrainians, as the state is implementing an accessible administrative mechanism: the digital platform itself withholds tax from the individual and transfers it to the state budget. The law also introduces a tax exemption for the sale of goods: it allows individuals to sell items through platforms for up to 2,000 euros without taxation.
The law also establishes a reduced tax rate on income earned through digital platforms.
“Today, the rate is 23% (personal income tax and military levy). Once the law takes effect, a 10% personal income tax rate will apply, with exemption from the military levy,” explains the MP.
And in the future, Getmantsev says, the rate may be adjusted in proportion to the reduction in the military levy rate, as it is tied to it.
“Our military levy is currently set at 5% for the duration of martial law and the following three years. In the fourth year after martial law is lifted, the levy will be 1.5%. The tax rate withheld from sellers by digital platforms will be adjusted accordingly. This means that instead of 10%, it will be 6.5%, and subsequently, after the military levy is abolished, it will be 5%,” he says.
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When the law takes effect
Certain provisions of the law take effect on November 1, specifically regarding the obligation of platform operators to register with the State Tax Service. However, most provisions of the bill take effect on January 1, 2027. The MP argues that this law benefits everyone: the state, businesses, and users.
“The state receives tax revenue. At the same time, for the reforms that we ourselves need most of all, Ukraine is receiving 90 billion euros from the European Union and over 8 billion from the IMF. Therefore, in my opinion, there is nothing to argue about here: we are passing a law that is beneficial to us and, at the same time, receiving support from our partners. We can only be grateful for that,” says Getmantsev.
He also notes that, compared to the Ministry of Finance’s draft, the bill has been completely rewritten. All risks were eliminated even before its first reading. The provision on mandatory disclosure of bank secrecy was dropped. The Ministry of Finance had proposed introducing special bank accounts to which the tax authorities could have access. This provision is not included in the law.
“We have also introduced an exemption: sales of up to 2,000 euros are not taxed. The first government draft bill No. 14025, which was rejected by the Verkhovna Rada in March, provided for 12 subsistence minimums (about 36,000 hryvnias) provided a tax return was filed. In addition, we have allowed sole proprietors to operate through digital platforms. In the Ministry of Finance’s version, this was prohibited,” the MP explained.
The only requirement is to work through a registered platform
Getmantsev assures that if a person works through a registered platform, they will not have to file tax returns on their own after this law is passed. The provision on mandatory tax returns was removed from the bill before it was submitted to the Verkhovna Rada.
“The only requirement is to work through a registered platform. The registry of platform operators will be available on the State Tax Service website. If a person works through an unregistered platform, the general taxation rules will apply. At the same time, the platforms themselves have an interest in registration, as registered operators gain a competitive advantage as legal businesses,” explains Getmantsev.
According to Getmantsev, platforms now have four obligations. First and foremost, platform operators must register with the State Tax Service if sellers from Ukraine receive income through such platforms. Platforms must also verify users’ identities. This means that citizens who conceal their identity or remain anonymous will not be able to use these services.
The MP explains that e-commerce platforms tax users’ income starting at 2,000 euros per year at a rate of 10% and transfer this money to the state budget. In turn, service platforms tax income starting from zero and similarly transfer the money to the budget. Additionally, platforms must provide tax authorities with information about the income received by the seller.
“Previously, everyone had to fill out a tax return, log into their online account, and verify how much money they had received over the course of the year. That’s complicated, you see? But now, people won’t even notice that anything is happening. Now this work has been shifted to the platforms, which will handle everything with a single click,” he says.
He explains that they discussed with platform representatives that they will make one-time investments in software development. After that, the process will be just as simple as before. Additionally, international platforms that already report sellers’ revenue to other countries that have joined the DPI have already set up all the necessary processes and can now simply extend them to sellers from Ukraine.
“Platform operators will submit reports once a year in electronic form. Ukrainian operators and operators from countries that have not joined the DPI will report directly to Ukraine. Non-resident operators will be able to use a special portal solution from the State Tax Service, which is already successfully used by value-added tax payers providing electronic services,” said Getmantsev.
Platform operators from countries that have joined the DPI (qualified operators) will report to the tax authorities in their own jurisdiction, and Ukraine will subsequently exchange this information with the relevant country as part of international automatic exchange.
“This is exactly how we receive information from each platform about the amount of income accrued to an individual. The State Tax Service cross-checks this data. If it detects an overlimit, it calculates a 10% tax on the difference and notifies the individual that they must pay this 10%. In other words, if a person sells on 10 platforms and earns 1,000 euros in income per year from each sale, the Tax Service will calculate and state that 10% must be paid on the 8,000 euros in income.” – ” – explains Getmantsev.
He says this is a general principle and rule that applies in all EU countries: platforms provide the government with information about the income that sellers from different countries earn using the respective platform, and governments exchange this information with one another through international automatic exchange.
“In addition to EU countries, the same mechanism operates in other countries that have joined the DPI (Multilateral Competent Authority Agreement on the Automatic Exchange of Information on Income Derived from Digital Platforms). As of today, this includes 35 countries, including EU member states. There may be certain differences in specific countries. For example, there are jurisdictions where digital platforms do not withhold tax, and individuals must file a tax return and pay this tax themselves. However, we, as the Committee, rejected this approach, even though it was discussed during the drafting of the bill,” explained Getmantsev.
Getmantsev reported that a large-scale event involving all digital platforms took place immediately before the law was passed. Representatives of the services unanimously supported the adoption of the bill.
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