The authorities will reduce the tax for 350 thousand drivers and couriers

What are the benefits of passing the law? For citizens:

• The tax rate on the income of a natural person receiving income through digital platforms will be reduced from 18% to 5%.
• It is not necessary to register a FOP. Income received by an individual through the platforms will be considered legitimate. Anyone who is already registered as a FPO will continue to earn seamlessly on the platforms without any changes.
• Calculation and deduction of personal income tax and reporting occurs automatically – thanks to the readiness of digital platforms to act as a tax agent.

Advantages for the state:

• According to estimates by the Ministry of Finance, the economic effect of the proposed reform will be about UAH 7 billion. With the continued development of the gig economy, this is just the beginning.
• Given the need for funds to support defense, the draft law has important strategic importance.
• Thanks to digitalization, a reasonable (reduced) tax rate and solidarity on the part of responsible platforms, a mechanism for automating the payment of such a tax has been created.

For example, the Dutch Uber BV is not a resident of Ukraine and does not even have a representative office here. However, from the very beginning of the implementation of the “Google tax” it pays 20% VAT on income. According to the requirements of the draft law, Uber will take on additional financial and administrative responsibility – to carry out all tax calculations and reporting instead of people who received income through its platform. That is, he becomes a tax agent.

The state will not need to “run after couriers” to force them to pay tax, nor allocate funds for the creation of complex systems. Uber, Bolt, Glovo and Uklon will cover all costs of developing a digital solution for automating accounting, payment, integration and reporting of tax data.

Benefits for society:

• In the conditions of active hostilities, many citizens feel a lack of funds due to lack of work or for other reasons, even in large cities. The ability to receive orders for your services through platforms largely solves the problem of unemployment.
• Military personnel who have completed their service during or after war will feel a strong need to return to social, professional activities that allow them to immediately earn money to meet basic needs. Digital platforms will help speed up, simplify and facilitate this process.

The scale of innovation Only on four platforms – Uber, Bolt, Uklon, Glovo – about 350 thousand drivers and couriers receive income. On the Kabanchik service alone, there are more than 100,000 specialists providing individual services. If we take into account similar online services, we will get about 500 thousand people.

At the same time, the gig economy (part-time jobs, additional or seasonal work online) is not limited to services. It is also about goods. In this case, the indicators may surprise many.

One of the leaders of online platforms in Ukraine is OLX, which hosts more than 10 million active ads (more than 3 million monthly) with an annual sales volume of more than $1 billion. (according to the platform itself).

It is, of course, impossible to control the profitability of all persons who place ads online. However, thanks to the innovation of the cashless service “OLX Delivery” (via OLX Pay/NovaPay), all transactions can be tracked, as data on the amount, date, payer and payee are recorded. Within this service, people receiving income through OLX delivery will automatically pay a tax of 5% plus a military levy.

Obviously, the scope of the reform significantly exceeds 350,000 drivers and couriers. Taking into account commodity and similar platforms (dealing, for example, with the rental of movable and immovable property, including residential and non-residential real estate, parking spaces, etc.), it varies from 1 to 10 million people. According to various estimates, there are about 2 million people who in one way or another receive income through digital platforms, and the state budget received UAH 2-10 billion already in the first years of the reform.

We will be able to determine the exact economic effect of the initiative of the draft law only after obtaining actual data, starting from the first year of its implementation.

Exchange of tax data with OECD countries The European Union directive, known as DAC7, runs through the thread of the draft law – on the exchange of tax data between EU member states. Ukraine is not yet a member of the European Union, but it cooperates with the OECD (Organization for Economic Cooperation and Development), which includes 38 countries, 22 of which are EU members. Most OECD member countries have signed up to exchange tax data.

The idea is to prevent double taxation of citizens thanks to the exchange of data between countries. For example, a Spanish citizen named Antonio Garcia works as an Uber driver in the Netherlands. In this case, there is an exchange of tax data between the tax authorities of the Netherlands and Spain, and Antonio’s home country will not have to pay the tax that has already been paid in the Netherlands.

From now on, Ukraine will de jure participate in compliance with the requirements of this directive, which will ensure the integration and harmonization of Ukrainian legislation with EU norms.

The course on the integration of legislation with the EU is also important for fruitful relations with the IMF and strengthening Ukraine’s position in foreign economic activity.

Exceptions Large hotel chains are excluded from the types of platforms that will be subject to the new law. According to the definition, these are “organizations that, using the platform, have carried out more than 2,000 real estate rental transactions for one ad unit.”

Similarly, for those who sell goods (for example, used goods – through OLH), a limit of UAH 96,000 (12 minimum salaries) per year is set, which is not taxed. There is an ongoing discussion on the unification of the size of the limit with similar EU legislation with the equivalent of 2,000 euros.

Platforms will also not be considered government structures or organizations with shares on the securities markets.

What’s next Two branches of government (legislative – represented by the Committee on Issues of finance, tax and customs policy, as well as the executive – represented by the Ministry of Finance, which, in fact, initiated the draft law) together with colleagues from various political factions and state bodies previously reached a consensus on the need to support the document.

This will allow for the first time in the history of Ukraine to create a legal framework for the activities and taxation of digital platforms and persons receiving income through them. Its fundamental aspect is innovation, automation of tax payment and harmonization ation with EU norms.

Considering the need to reintegrate veterans and overcome unemployment, the draft law will have a powerful social effect. After all, thanks to the digital capabilities of the platforms, citizens will have the opportunity to legally receive income without the need to register as a private enterprise.

According to preliminary estimates of the Ministry of Finance, the budget will receive about 14 billion UAH in the near future, 7 billion UAH in the form of tax revenues, and the same amount in the form of a military levy, which is important for the country’s defense.