Legal principles of IT-taxation in Ukraine

Abstract

Global digitalization is a consequence of the development of information technology, as the latter interact with all areas of modern life. The global Covid-19 pandemic has led most businesses to move to telecommuting, forcing them to use e-commerce and other forms of IT in part or in full. Such a rapid spread of the use of IT activities and their results raises the issue of proper legal regulation of taxation of this type of activity, for which it is necessary to determine the legal principles on which the taxation of IT activities in Ukraine should be based. Ukrainian and foreign scholars have studied the legal principles and principles of taxation, but the legal principles of taxation of IT activities in Ukraine have not been studied.
 The article analyzes the views of Ukrainian and foreign scholars on the definition of legal principles of taxation and determines that the legal principles of taxation of IT activities are determined by the laws of economics guidelines for legal regulation of taxation of IT activities, ensuring the interests of IT entities, the state and society. It is stated that the taxation of IT activities can be carried out on the same principles as ordinary business activities, but the general principles are specific to IT activities. Therefore, the Tax Code of Ukraine should be supplemented by a separate article that will provide for the principles of taxation of IT activities. Such principles include the principles applicable to the taxation of this activity in the EU Member States and the United States: neutrality, effectiveness, certainty and simplicity, efficiency and fairness, flexibility. However, given the cross-border nature of IT, the principle of determining tax jurisdiction is particularly important. According to the author, it is appropriate to give preference to the application of the principle of territoriality of tax jurisdiction as a legal principle of taxation of IT activities in Ukraine. This is due to the widespread use of the Internet by IT entities, which allows them to register in jurisdictions with low tax burdens, while conducting their business and earning income in Ukraine. And the taxation of IT entities in the jurisdiction of the state of income (destination country) should become a legal principle of taxation of IT activities in Ukraine.