Cloud Blog – New tax by Google: how the new law will affect the profitability of IT companies

New tax by Google: how the new law will affect the profitability of IT companies

In June 2021 the President of Ukraine signed Law No. 1525-IX, which implies the introduction of an additional 20% for online services. The law applies to non-resident companies that provide their products in Ukraine. As a result, individuals who use Google services will be required to pay an additional 20% VAT for each service or product. 

To comply with these innovations, Google started charging 20% VAT on its services in Ukraine. On December 1, platform users received letters with the following content: 

 

To comply with local legislation in Ukraine, Google begins charging 20% VAT on digital services for individuals and entrepreneurs in Ukraine who are not registered as a business. If you have a business account in Ukraine, it means that you use it for business purposes on behalf of a registered legal entity […] According to the terms of use of Google Cloud for Business, you will be responsible for assessment and payment of any taxes in Ukraine”.

 

The fee is implicitly called “Google tax”, although it applies not only to IT companies, but also to companies with revenues over 1 million hryvnias a year. These include Meta (ex-Facebook), Microsoft, Amazon, Netflix, etc. 

The law was passed by the head of the Committee on Finance, Danil Hetmantsev, in order to oblige foreign companies to pay taxes. Now, since December 1, all digital services and products of Google have become more expensive. Only individuals who conduct transactions through their bank card will pay 20% more. 

But there is some good news. Cooperating with Cloudfresh, you are no longer obliged to pay 20% VAT under the new law. This opportunity is available due to the status of an official Google reseller in Ukraine. You will be able to pay for Google services and products at the old price. Let’s look at an example. 

With the new payment terms, you can get 100 TV memory on Google cloud for 275 UAH per month. But if you decide to buy memory through Cloudfresh, you will be able to buy space on the cloud at the old price – 229 UAH.  

To contact Cloudfresh specialists, leave an application on the website, and we will help you find the right solution for your business at the old price.