In the near future, the Ukrainian parliament should consider draft law No. 4184 on amendments to the Tax Code of Ukraine regarding the introduction of value added tax (VAT) for the so-called global technology giants. Or, more simply, there should be an attempt to introduce a “tax on Google”.
In fact, the operations of technology giants have already imposed indirect taxes (in particular, VAT) on all and sundry. Some countries are beginning to levy direct taxes (that is, tax on profits or income) even without registering representative offices of such companies in the country. But in the case of Ukraine, such a proposal looks unexpected for two reasons at once. First, it is reasonable, and reasonable steps are not the strong point of the post-Maidan regime. Secondly, it is an attempt to get at least something for the Ukrainian budget at the expense of companies headquartered in the United States. And for the current Ukrainian government, this is a sacred place where you can send gifts, in extreme cases, where you can ask for a loan, but not demand any payments …
Perhaps, the consideration of this bill should demonstrate whether there are at least some limits to the humiliations with which the “Western partners” time and again lovingly subject Nezalezhnaya. Or there are no limits, that is, the bottom.
The problems associated with the activities of tech giants are fairly clear and obvious. These monsters work all over the world, that is, in almost all countries. At the same time, taxes in the overwhelming majority of jurisdictions are not paid at all or are paid in a meager amount. But what is there in most countries – they use any tricks in their native harbor in order not to pay. About which, by the way, they have repeatedly received a thrashing from Donald Trump during his presidency. And in the end they even had to pay something at home. For which then they got even with Trump in full, playing up to the Democrats and throwing him out of the media space.
Such a situation for decades, not even years, has led to the fact that these corporations earn huge money in certain markets and, at the same time, do not pay any taxes on these markets. For example, it is known from open sources that in 2019 Amazon in France alone recorded a profit of 25 billion euros, but practically did not pay taxes there. And Apple, according to the findings of the European Commission, pays 50 euros from its European profits for every million earned. This distorts the competitive environment, effectively destroying both smaller local companies and traditional businesses – if, for example, trade. This is on the one hand. On the other hand, it allows tech giants to make fabulous money uncontrollably. As a result, they not only surpassed most of the world's states in terms of financial capabilities, but also to the fact that they are beginning to dictate their will on a global scale. And the promotion of riots and coups, on the one hand, and total censorship on the other – this is only the visible part of the iceberg of their power.
At the beginning of the 2000s, it was in the European Union that they began to take the first timid steps to attract technology giants to taxation. To begin with, they imposed VAT on operations for the supply of software through electronic networks, as well as IT services in general, plus all kinds of art, educational, sports and other programs. Later, the scope of taxable transactions steadily expanded, covering the fattest chunks by 2021 – the supply of goods and advertising. First, other European states (Norway, Iceland) began to join the EU, and later other countries of the world. Since 2017, VAT on transactions for the supply of electronic services has been introduced in Russia, since 2018 – in Belarus. Today, about 80 countries levy some form of VAT on the operations of tech giants.
About five years ago, different countries were seriously engaged in the introduction of direct taxes in relation to technology giants. As a rule, we are talking about income tax – due to the difficulties of controlling expenses, and, consequently, calculating profits. The rates vary widely – from 1.5% to 15%. The complete list of taxable income is also different. By the way, Taiwan was the first to introduce such a tax. Uruguay, Slovakia, Pakistan and Zimbabwe were also pioneers. Of the major countries, the first such tax at a rate of three percent was introduced by France, which planned to collect 450 million euros in 2020. The Americans (including Trump) were outraged, threatened, but resigned. Now more than 20 countries tax the income of tech giants, received on their territory. In Russia, while the income of such companies is not taxed, the issue is stuck at the stage of discussion.
In Ukraine, of the giant companies, in fact, only Google pays some taxes. And only because he independently registered his representative office in the country – LLC “Google”. But the scale of payments is more than modest. For example, in 2018, Google LLC paid 31 million hryvnias in income tax – with income estimated at at least 2.5 billion hryvnias. However, the rest of the giants do not pay anything to the Ukrainian budget at all. Although they not only actively earn money, they do not even actively participate, but rather direct the political life of the country.
The draft law, which is being prepared for consideration in the Rada, proposes to impose VAT on “non-residents who provide electronic services to individuals, the place of delivery of which is located in the customs territory of Ukraine.”
That is, we are talking about the mildest form of taxation, which is used in almost a hundred countries and does not prevent technology giants from withdrawing profits from Ukraine without taxation. In the case of any other country, probably, there would be no questions with the adoption of such a law. But in Ukraine, the first attempt to adopt it, made in late 2019 – early 2020, failed. Including under the cries of “soros” that it is impossible to tax holy people – we will spoil the investment climate, and all investors and investments will leave us. At the same time, of course, no one says that, of course, no one is carrying any investments to Ukraine, so there is no one and nothing to leave.
An even more revealing example is an attempt to push through a law on at least minimal support for its own machine building by adopting requirements for the localization of production in the implementation of public procurement. Requirements, I must say, are minimal (from ten to thirty percent), and only for a limited list of goods in the production of which Ukraine has not yet lost its competence. Moreover, the law left room for circumvention, for example, when purchasing with credit funds. And nevertheless, the collective West exponentially wiped its feet even on such modest intentions of Ukrainians, simply banning the adoption of such norms. And on January 21, Volodymyr Zelenskyy urged not to accept these changes, since they allegedly violate agreements with the EU. In fact, if they violated anything, then Ukraine's total vassalage to the West, which does not imply any actions at all outside of following the set course for the destruction of industrial production with a relatively high added value. Incidentally, the story of the sanctions against Chinese investors in Motor Sich is also from the same series.
In this regard, the introduction or non-introduction by Ukraine of VAT, which is already widely used in Africa and Asia, will become a kind of litmus test of whether Ukraine's colonial status is the lowest of all possible.