With the rise of digital platforms and the possibilities that the internet provides for businesses, more and more sellers are able to offer goods and services via these platforms and the internet. In this context, it has been difficult for the Ukrainian tax authorities to trace the flow of goods and services as well as to identify sellers to ensure that these goods and services are duly taxed.
On 29 April 2025, the Cabinet of Ministers of Ukraine adopted a draft bill ("Bill") proposing implementation of the reporting requirements for digital platform operators and a separate tax regime for sellers operating through these platforms.
Key takeaways
Ukraine is expected to implement a number of due diligence and reporting obligations for digital platform operators, which largely mirror the EU DAC7 rules. They are expected to take effect as of 1 January 2026.
The Bill designates platform operators as "tax agents." Their tax compliance obligations include, among other things, (i) collecting and reporting selected data and information on the sellers active on their platforms and (ii) withholding and paying taxes due from qualifying individual sellers.
The Bill extends the "tax agent" obligations to both Ukrainian and non-Ukrainian platform operators.
Qualifying individual sellers that fulfill selected criteria are offered a tax incentive in the form of a reduced 5% Personal Income Tax (PIT) rate.
Digital platform operators and other businesses should consider whether they might be affected by the obligations and consider, among other things, the following points:
- Am I in scope?
- What are my obligations for my own activities under the Bill and in respect of sellers and service providers active on my platform?
- How do my obligations under the Bill differ from the DAC7 rules?
- What should I do if I want these sellers and service providers to remain active on my platform in the future?
- Do I have adequate processes and procedures in place to ensure that I can comply with the due diligence and reporting obligations under the Bill? How will the information be collected as efficiently as possible, and how can we verify the accuracy of this information?
Businesses will need to consider their obligations and take appropriate measures.
Background
Both professional businesses and private individuals are increasingly selling goods and services on digital platforms and the internet. This makes it difficult for the Ukrainian tax authorities to trace the identities of sellers and the flow of goods and services, as well as to ensure that the supplies of goods and services are effectively reported and taxed in the correct jurisdiction.
The OECD has been trying to address this problem for quite some time, resulting in the OECD Model Rules for Reporting by Platform Operators and the Multilateral Competent Authority Agreement on Automatic Exchange of Information on Income Derived through Digital Platforms (DPI MCAA).
On 22 March 2021, the EU Council introduced new rules that aim to collect, verify and share data from online sellers and service providers (DAC7). This amended the Directive on Administrative Cooperation in the Field of Taxation (Council Directive 2011/16/EU).
On 29 April 2025, the Cabinet of Ministers of Ukraine adopted the Bill, which provides a number of due diligence and reporting obligations for digital platform operators. They are expected to take effect as of 1 January 2026. The Bill must be voted into law by the parliament of Ukraine and signed by the president.
The measure will facilitate revenue mobilization and the harmonization of Ukrainian tax legislation with EU legislation and OECD standards.
The Bill also sets out a framework for automatically exchanging reported data with other jurisdictions through the DPI MCAA, which the government of Ukraine is expected to sign.
Due diligence and reporting obligations: the main questions
Who needs to collect and report information?
The due diligence and reporting obligations under the Bill apply to platform operators, as they are the entities that contract with sellers to make all or part of a platform available to them. The Bill defines a platform as any digital interface that connects sellers of certain qualifying goods and services with potential buyers. Specific exceptions are provided, including for software that, without any further intervention, exclusively processes payments or allows users to list or advertise a qualifying activity.
Both Ukrainian and nonresident platform operators are targeted. Nonresidents only need to report transactions concerning sellers that have a sufficient nexus in Ukraine.
However, if a nonresident platform operator is located in a jurisdiction that is a DPI MCAA signatory, the platform operator's reporting obligation does not apply in Ukraine.
At the same time, the Bill designates platform operators as tax agents with respect to the income derived by individual Ukrainian sellers.
What kind of information does the platform operator need to collect and share?
On the one hand, platform operators are subject to due diligence obligations regarding the collection and verification of seller-relevant information. On the other hand, platform operators need to collect and share information on transactions carried out by qualifying sellers.
Due diligence procedures
The due diligence requirements go beyond the standard KYC requirements and require comprehensive collection and reporting of the seller's personal data to the competent authorities (including name, (primary) address, tax identification number, VAT identification number, date of birth/commercial register number, and the existence and location of a permanent establishment through which the activities are carried out). Depending on the seller's specific activity, information about the object of sale or rent must also be collected, e.g., in the case of the rental of immovable property, the property's address and register identification must be collected.
In addition, the platform operator must verify the collected personal and factual information for accuracy and reliability. In the case of doubt, the platform operator must obtain further documents, such as a tax residency certificate or an identification document (such as an ID card or passport).
Finally, the platform operator must disclose the seller's data to the Ukrainian tax authorities.
Transactional information
In addition to carrying out the abovementioned due diligence procedures and collecting information through its framework, the platform operator must also collect transaction-related information, e.g., account number, the amount of the seller's compensation that has been paid and credited, any fees, commissions and taxes, the lease term in the case of immovable assets, etc. The platform operator must report this information to the Ukrainian tax authorities.
Does the platform operator need to collect information on each seller?
Platform operators must report certain data and information on qualifying sellers active on their platform. The definition of a seller includes both individuals and legal entities that have a sufficient nexus in Ukraine and/or in a jurisdiction that is a DPI MCAA signatory (i.e., they are either resident in these jurisdictions or are renting out real estate located in these jurisdictions) and that are registered on the platform.
Not every activity of the targeted sellers falls within the scope of the Bill. The scope is limited to the following reportable activities:
- Leasing real estate, including residential properties, commercial properties and parking lots
- Providing personal services (time- or task-based work, such as freelance work, whether online or offline)
- Selling goods
- Renting any means of transport
Certain sellers are explicitly excluded from being reportable sellers, e.g., governmental entities, listed entities and entities related to these.
By when does the information need to be reported?
If adopted, the Bill is expected to apply from 1 January 2026. The reporting obligation, which covers the transactions in a given calendar year (reporting period), must be fulfilled by 31 January of the following year. Hence, the first report will need to be made with respect to transactions covering the calendar year 2026. The Ministry of Finance should set a deadline for the first reporting year, which must not be earlier than 31 January 2027.
Other practical considerations: tax incentives for sellers
The Bill offers a reduced 5% PIT rate (a 5% Military Tax (MT) also applies) for individual sellers whose income is derived from the reportable activities, so long as they:
- Are 18 years or older.
- Receive their consideration in a Ukrainian bank account, which must be communicated to the platform operator.
- Are not registered as private entrepreneurs.
- Do not employ other individuals.
- Earn no more than 834 minimum wages (currently UAH 6.67 million) per year.
- Do not sell excisable goods.
Otherwise, a regular 18% PIT shall apply.
The Bill designates platform operators as tax agents that must withhold 5% PIT and 5% MT from the sellers' consideration and remit it to the budget on a monthly basis.
By Hennadiy Voytsitskyi and Mirko Marinc, Partners, and Roman Koren, Senior Associate, Baker McKenzie
