As a result of changes in the tax policy of Ukraine, hundreds of Internet providers have ceased their activities. This has raised concerns in the industry and attracted the attention of lawmakers.
Provider crisis
Large-scale withdrawal from the market
According to the National Commission for the Regulation of Electronic Communications (NKER), for the period from August to October 2024, 487 business entities applied for exclusion from the register of providers of electronic communication networks and services. By October 8, 386 such applications had been processed. Taking into account regional branches, the total number of entities that have ceased or are planning to cease their activities has reached 1316.
Reasons for the mass exit
The main reason for this mass exit from the market was the change in tax policy regarding Internet providers. At the end of September, the State Tax Service of Ukraine massively canceled the registration of providers as tax payers under the simplified system. This has forced many small and medium-sized providers to either close their businesses or go dark.
Reaction of the industry and legislators
People's Deputy Alexander Fedienko drew public attention to this problem, pointing out the injustice of this approach and the potential negative consequences for the industry. He warned about a possible monopolization of the market and a subsequent increase in prices for communication services.
At the same time, the head of the tax committee of the Verkhovna Rada, Danilo Getmantsev, welcomed these changes, calling them the “de-shadowing” of the industry and arguing that this will not lead to an increase in the cost of services.
Legislative nuances
According to the Law "On Electronic Communications", which came into force on January 1, 2022, companies providing communication services are also required to carry out maintenance and operation of networks. This rule actually excludes the possibility of working on a simplified taxation system for providers.
Glossary
- NEC - National Electronic Communications Regulatory Commission, telecommunications regulator of Ukraine
- Alexander Fedienko - people's deputy of Ukraine, actively defending the interests of small Internet providers
- Danilo Getmantsev - head of the tax Committee of the Verkhovna Rada of Ukraine
- KVED - Classifier of types of economic activity used to classify enterprises by their main activity
- Individual Entrepreneur - Physical person-entrepreneur, form of doing business in Ukraine
Links
- Request from MP Alexander Fedienko
- Post by Alexander Fedienko about the situation with providers
- Article "Ukrainian Kommersant" about the situation with providers
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Discussion of the topic – Mass closure of Internet providers in Ukraine: tax crisis in the industry
487 Ukrainian Internet providers with 1,316 regional branches ceased their activities after a forced transfer from a simplified to a general taxation system.
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