The Taxation of IT and Digital Communications Entities' Activity: Its Legislation and Accounting in Ukraine

Abstract

Modern challenges of the economy are an adaptation to the changes taking place in the world community. New forms of interaction in human society, transferred to the digital space, are gaining increasing importance. Economic entities must respond fully to the demands of the digital environment. At the same time, the state mustn't reduce its fiscal control over such digital operations. The purpose of the article is to analyze the legislative regulation of taxation of business entities that work in areas related to IT technologies and activities carried out on the Internet. This study covers difficulties and debatable issues arising in the taxation of business entities due to the implementation of digitalization. The authors systematized the features of taxation of the activities of Diya City residents following the current tax legislation of Ukraine. The article contains detailed explanations of which electronic services are subject to VAT and which transactions are not electronic services. The main key points for non-residents and providers of electronic services regarding VAT payment have been systematized. Attention is paid to issues related to the taxation of transactions with cryptocurrency. The authors performed a detailed analysis of the Draft Law of Ukraine “On Amendments to the Code of Criminal Procedure and Some Other Laws of Ukraine Regarding Transactions with Cryptocurrency”, and individual tax consultations of the State Tax Service of Ukraine. It was established that when taxing operations with virtual assets, particularly cryptocurrency, it is necessary to be guided by the norms of the Tax Code of Ukraine. In individual conflicting situations that arise due to various types of operations with cryptocurrency, it is recommended to contact the State Tax Service for individual clarifications.