Tax on advertising in Ukraine 2022-2024 in Google, Instagram, Facebook. Who pays and what to do?

Effective January 1, 2022, ads on Facebook, Instagram, Tiktok, Google and a number of other companies are taxed at 20%.

Who will pay?

This tax is mandatory for all advertisers whose address is "Ukraine" and who independently added a VAT number to their advertising account. When you run ad campaigns on Google, Instagram, Facebook or any other platform, the cost of that ad includes all necessary taxes that those companies have to pay. The responsibility for paying these taxes usually lies with the advertising platform, and not with the individual user or the company that hosts the ad. However, as an entrepreneur or company, you may need to account for these costs when filing your tax returns. Advertising expenses can often be written off as a business expense, reducing the overall tax base.

There is no need to go to the bank or fill out documents - the sites themselves pay VAT by adding these 20% to the advertising check. Be careful, since the beginning of 2022, all advertising costs have increased by 20%.

If you advertise on your page (public, website), then you do not need to pay this tax. Also, this tax does not apply to copywriters and designers who produce advertising, or their clients. But if you buy advertising, then 20% still has to pay. VAT is charged on the amount that you were charged for paying for advertising placement services, but not for its production or configuration.

What to do with it?

VAT charges for e-services are a common practice all over the world. However, there are several ways to avoid increased spending. You can change the country of your ad account when you create it. Here is a list of countries that have not yet introduced similar laws for Facebook https://datawrapper.dwcdn.net/5mrFd/23/. You can also buy cabinets with a balance and advertise from them, but this will significantly worsen the result.

However, all this can lead to suspicion and there is always a chance to get an account block for circumventing the rules, and it also violates the law of Ukraine. Your best bet is to pay the tax. If you are a sole proprietor or a legal entity and already pay VAT, you can indicate this in your account and you won’t have to pay twice. It is worth considering that taxes may depend on the structure of your business and its location. If you are not sure about the tax liability of your business, it is best to seek the advice of a professional tax advisor or auditor.