Almost half a thousand internet providers ceased operations due to new taxes
15 October 2024 17:22
Almost half a thousand Ukrainian Internet service providers have applied to cease operations following the tax changes for them. This is stated in the response of the National Commission for the State Regulation of Electronic Communications, Radio Frequency Spectrum and Postal Services (NCCS) to a request from Ukrainian MP Oleksandr Fediyenko. The MP shared his response on Facebook, reports "Komersant Ukrainian"
Thus, in August-October 2024 (until 8 October), 487 Internet providers submitted applications to the NCCS to be removed from the relevant register. the commission has already granted 386 applications.
The leading regions in terms of the number of such applications are Kyiv region and Kyiv (156 applications), Cherkasy (108) and Odesa (74) regions.
“I don’t know where they went, we can assume that some of them closed down, some went into the shadows, and left the regulator’s supervision. Some may be for sale. But these are people! These were self-employed citizens of Ukraine. And these are only the first consequences after the thoughtless actions of the tax authorities! I see a haphazard approach of a state body that has never even analysed the cause-and-effect relationship,”
– the MP wrote.
He suggests that after such pressure from the tax authorities, about a dozen of the largest Internet providers may remain in the country.
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What is being done to internet providers
The State Tax Service has long been mulling over the idea of bringing internet service providers under the general taxation system, but has only decided to do so now. In the summer, the head of the Verkhovna Rada’s Finance Committee, Danylo Hetmantsev, made a high-profile statement. He stated that the state loses about UAH 3 billion a year due to the simplified taxation system used by small Internet providers.
At the same time, the Tax Service began sending letters to Internet providers demanding that they switch to the general taxation system from 1 October. In case of refusal, they are threatened with cancellation of their registration.
In fact, the ban on Internet providers operating under the simplified taxation system was introduced on 1 January 2022, but, presumably due to the full-scale war, it was not implemented. Thus, the Tax Code does not prohibit companies from KVED 61.10 that provide fixed-line internet services from operating under the simplified taxation system. However, it does prohibit those engaged in the maintenance and operation of networks. On 1 January 2022, the Law on Electronic Communications, adopted in 2020, came into force. According to this law, all companies that provide communication services must simultaneously perform maintenance and operation of networks. This means that these companies cannot operate under the simplified taxation system.
As of 4 October 2024, the NCCEC’s “register of suppliers of electronic communication networks and/or services” contained 4,891 suppliers.
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