IT-related legislation and changes that come into effect in 2024

Resumption of tax audits

As a reminder, on 5 November 2023, the President of Ukraine signed a draft law canceling the moratorium on tax audits. It contains a list of taxpayers to be included in the tax audit schedule for 2024 (starting from 1 November 2023). The schedule is available on the official website of the State Tax Service of Ukraine.

The list of taxpayers subject to such audits can be found at the link.

Amended Law of Ukraine “On Protection of Consumer Rights”

The law was officially published on 7 July 2023 and will come into force one year after its official publication, i.e. on 7 July 2024.

For the first time, the concept of “marketplace” and other concepts to regulate the sale of goods via the Internet (e-commerce) are enshrined in law. The law also provides for the creation of an electronic portal “e-Buyer”, the purpose of which is to collect and accumulate information about sellers on the internet. The portal provides for the creation of an automated system of verified sellers, and the State Service of Ukraine on Food Safety and Consumer Protection will be empowered to interact with Internet providers to block websites of unscrupulous e-commerce operators. Details can be found in the text of the law.

New Law of Ukraine “On Digital Content and Digital Services”

Another law is based on the protection of consumer rights, namely consumers of digital content and digital services. It provides for the criteria of conformity of digital content and services provided by a contractor under a contract with the customer of such services. In addition to the contractors’ liability, the agreement sets out penalties to be paid by the contractor to the state budget for violations related to the provision of digital content or digital services, as well as for non-compliance of such content or services with the terms of the law or the agreement.

The law comes into force on 2 March 2024.

Reporting by controlled foreign companies in 2024

Earlier I wrote about the submission of CFC notifications. In addition to these, in 2024, CFC controllers will need to submit a Report on Controlled Foreign Companies to the State Tax Service of Ukraine.

Legal entity controllers must submit the report together with their corporate income tax return for 2023 (by 1 March 2024 for the Reports for 2022-2023.) Individuals must submit the report together with their property and income tax return (by 1 May 2024 for the Reports for 2022-2023). The CFC report must be accompanied by duly certified copies of the CFC’s financial statements confirming the company’s profit or loss.

It is worth noting that the Report is submitted for each controlled foreign company separately.

New regulations on Diia City

Starting in 2024, the limit on cooperation with simplified taxpayers (usually, most sole proprietors in Ukraine are simplified taxpayers) will be introduced. This limit should not exceed 50% of all expenses of the Diia City resident company.

For transactions with simplified taxpayers, 50% of all expenses are limited to those who pay income tax on general terms (18%) and the Exit Capital Tax (9%).

In other words, if a Diia City resident makes more than half of their expenses on the single tax system in 2024, the amount exceeding this limit will be subject to the Exit Capital Tax. The tax authorities will receive 5% of this amount as a single tax payment from the single taxpayer and 9% from the Diia City resident as Exit Capital Tax.

Thus, starting from 1 January 2024, taxpayers are obliged to increase their financial results for a certain reporting period by the amount of the value of property, works, and services (except for royalties) that they purchased from single taxpayers.