Continuation of preferential VAT regime is vital for the IT industry

07/ 12/ 2022

Saving the countrys foreign currency income from the export of services in the current conditions is essential, in fact, as well as the stimulation and support of business, in particular, which provides foreign currency income to the country, such as IT companies. Therefore, a necessary support factor is currently the extension of the preferential VAT regime, as according to the Tax Code of Ukraine, for the IT industry, VAT exemption is provided for operations on the supply of software products, as well as operations with software products, the payment for which is not considered royalty. At the moment, this rule is expected to be in effect until January 1, 2023. In view of this, on July 28, 2022, draft law No. 7611 was registered in the Verkhovna Rada of Ukraine, which proposes to extend the abovementioned benefit until January 1, 2028 (draft of the Law On Amendments to Subsection 2 of Chapter XX Transitional Provisions of the Tax Code of Ukraine ( regarding the prolongation of features of taxation of software products). The IT Committee of the European Business Association supports this document and appeals to peoples deputies to vote for it at the next meeting because there is less than a month left before the norm expires. And the main goal of the draft law is the countrys achievement of European and global leadership in the IT industry in the coming years. Ukraine has absolutely every chance to become a global IT hub. Ukraine has already demonstrated and is demonstrating to the world what the Ukrainian creative industry and its specialists are capable of. At the same time, in order for development to continue, it is important to maintain the appropriate competitive conditions for businesses, to have competitive Ukrainian products (and the VAT will make the 20% tax a direct tax on turnover, which will affect the increase in the cost of services and make it difficult to do business in the industry as there will be a need for specialists to keep records, calculation and reporting on VAT, which will lead to additional costs of such companies, etc.). Many countries in the world are offering or starting to offer attractive concessions and benefits for IT companies. So Ukraine needs to keep its leadership position! Therefore, in order to support IT companies that remain working from Ukraine, as well as, as much as possible in the current conditions, to facilitate their functioning, it is important to maintain such support from the state in the form of an extension of the VAT benefit. At the same time, it is certainly important to pay attention to other sectors of business and dialogue, because it is not easy for all businesses operating in Ukraine, as well as for the country in general. Therefore, we hope that the voice of business will be heard and draft law No. 7611 will be adopted! This will ensure the competitiveness of the IT sector among other countries, make it attractive for investments, promote development in the conditions of martial law, and contribute additional (tax) revenues to the budget.

Saving the country’s foreign currency income from the export of services in the current conditions is essential, in fact, as well as the stimulation and support of business, in particular, which provides foreign currency income to the country, such as IT companies.

Therefore, a necessary support factor is currently the extension of the preferential VAT regime, as according to the Tax Code of Ukraine, for the IT industry, VAT exemption is provided for operations on the supply of software products, as well as operations with software products, the payment for which is not considered royalty. At the moment, this rule is expected to be in effect until January 1, 2023.

In view of this, on July 28, 2022, draft law No. 7611 was registered in the Verkhovna Rada of Ukraine, which proposes to extend the abovementioned benefit until January 1, 2028 (draft of the Law “On Amendments to Subsection 2 of Chapter XX “Transitional Provisions” of the Tax Code of Ukraine ( regarding the prolongation of features of taxation of software products).

The IT Committee of the European Business Association supports this document and appeals to people’s deputies to vote for it at the next meeting because there is less than a month left before the norm expires. And the main goal of the draft law is the country’s achievement of European and global leadership in the IT industry in the coming years.

Ukraine has absolutely every chance to become a global IT hub. Ukraine has already demonstrated and is demonstrating to the world what the Ukrainian creative industry and its specialists are capable of. At the same time, in order for development to continue, it is important to maintain the appropriate competitive conditions for businesses, to have competitive Ukrainian products (and the VAT will make the 20% tax a direct tax on turnover, which will affect the increase in the cost of services and make it difficult to do business in the industry as there will be a need for specialists to keep records, calculation and reporting on VAT, which will lead to additional costs of such companies, etc.). Many countries in the world are offering or starting to offer attractive concessions and benefits for IT companies. So Ukraine needs to keep its leadership position!

Therefore, in order to support IT companies that remain working from Ukraine, as well as, as much as possible in the current conditions, to facilitate their functioning, it is important to maintain such support from the state in the form of an extension of the VAT benefit. At the same time, it is certainly important to pay attention to other sectors of business and dialogue, because it is not easy for all businesses operating in Ukraine, as well as for the country in general.

Therefore, we hope that the voice of business will be heard and draft law No. 7611 will be adopted! This will ensure the competitiveness of the IT sector among other countries, make it attractive for investments, promote development in the conditions of martial law, and contribute additional (tax) revenues to the budget.