• The opening is the first in Ukraine, as the Ukrainian business team (business dev, marketing, and PR) is now working as part of the global business growth team.
• The company expects the new person to lead and strengthen the Ukrainian team, help launch new partnerships, and generally become the face of Rakuten Viber in Ukraine.

“Ukraine is among the key countries for Rakuten Viber, so we are actively looking for a person who is physically located here and understands well how Ukrainians live and how our product can be useful to them,”

the company says.

Main duties

On February 19, 2022, the vacancy was published on the company’s website. According to it, the company is looking for a person who will deal with the strategic development and tactical implementation of Viber’s business development, marketing, and PR activities of the company in the country. The ideal candidate should have experience working with large business partners, government bodies, NGOs, and the media, understands the needs of marketing and PR, and have an analytical approach to measuring the company’s performance on the market. The main goal is to increase the user base in Ukraine and their involvement.

Main requirements

• 8+ years of team management experience;
• 5+ years of work in the field of digital services for users;
• 5+ years of experience in business development or sales in the region;
• 5+ relevant experience in marketing or digital, in particular, media planning, SMM, e-commerce, and sales;
• experience of participating in joint initiatives or hi-tech projects with state bodies will be a big bonus;
• strong analytical skills, result-oriented;
• knowledge of marketing tools and metrics that measure effectiveness;
• good knowledge of the local fintech ecosystem will be a plus;
• university diploma (economics, marketing, digital, computer program development or related fields);
• fluent spoken and written English.

What’s new in the bill?

The document supplements the Tax Code with another Article 208 on the taxation of electronic services. According to the text of this article:

• Electronic services that non-resident companies supply to individuals in Ukraine are subject to VAT (20%).
• A non-resident company is a company that does not have a permanent representative office in the country. It must register in the Ukrainian tax office as a VAT payer to provide services to Ukrainians. This condition works if the previous year, the company delivered services to individuals in Ukraine for the equivalent of UAH 1 million. If the amount is less, it is possible to register as a VAT payer voluntarily. All this can be done through the electronic service “VAT for non-residents.”
• If services are delivered in Ukraine through an intermediary, the one is the supplier for this project. If the intermediary is also a non-resident, he or she has to act following the article.
• At the same time, the “tax on foreign advertising” rule is excluded from the code. That means that Ukrainian legal entities and individual entrepreneurs will not have to pay a 20% tax when buying electronic services from foreign companies, as Oleksandr Bornyakov, the Deputy Minister of Digital Transformation of Ukraine, explains.

The authors of the bill in an explanatory note cite the example of the EU countries and Russia. In the latter, such services are subject to VAT since January 1, 2017. Since then, Apple, Google, Microsoft, Netflix, Bloomberg, Alibaba, Booking.com have registered as VAT payers in the Russian Federation, according to the authors of the bill.

Analysis of similar bills

Previously, we wrote more about what this initiative can result in (in particular, for the advertising market).

A similar bill has already been submitted to the parliament in May this year, but voting has not yet been held. At that time, many experts agreed that it would mean a 20% increase in the price of services for users.

The Government believes that such innovations will create extra ₴3 billion of tax revenues, as was expressly stated by the Head of Verkhovna Rada’s Committee on Finance, Taxation and Customs Policy, Danylo Hetmatnsev. He also assured the public that Facebook and Viber had agreed to collaborate. AIN.UA’s editor has been able to neither obtain comments from the representatives of the services nor find out where the 3 billion figure came from. The committee that initiated the bill also failed to explain it. It is understood that Ukrainian advertisers themselves will pay for VAT introduction: it is they who will have to pay more for advertising services.

In this article, the AIN.UA editor explains what the draft bill is suggesting, to whom it is targeting, and how it will affect the digital advertising market.

About the bill

The matter concerns the bill No. 2634 on the VAT on digital services provided by foreign companies with no Ukrainian offices to individuals in Ukraine. What this document proposes to change:

• Non-residents having no representative office in Ukraine and providing digital services to individuals in Ukraine are to be added to the list of VAT payers. Intermediaries for such types of services should be added as well.
• The VAT is 20% and is included in the price of digital services.
• According to the text of the bill, digital services include all services provided via the Internet, such as:
  • images, texts, photos;
  • games (incl. gambling);
  • advertising services on the Internet and in mobile applications;
  • cloud-based data storage services;
  • software supply and updating, remote software maintenance, etc.
• Non-resident companies without local representative offices should be registered as VAT payers. The registration is mandatory if the company generated a revenue of more than ₴1 million for digital services in Ukraine during the previous year. Such companies have been promised a simplified registration procedure. They do not issue VAT invoices but submit simplified tax returns.
• If a non-resident company does not get registered it will be liable to a fine of ₴8,500.

In a nutshell: foreign companies having no representative offices in Ukraine (such as Facebook or Viber), or intermediaries granting access to their services, will have to be registered as VAT payers and pay the VAT on services provided to individuals, with the sum of the tax included in the price of their services.

Regardless of the ₴8,500 fine, it is still unclear how exactly the Ukrainian tax authorities will ensure that non-resident companies are registered in Ukraine as VAT-payers.

If the bill is passed, it will enter into force the day following the publication and will cover taxation periods after January 1, 2021.

What do non-resident companies say?

In a recent interview, the Head of Verkhovna Rada’s Committee on Finance, Taxation and Customs Policy (and the initiator of this project), Danylo Hetmatnsev said, that these innovations have already been discussed with international companies that provide digital services to Ukrainians. According to him, Facebook and Viber agreed to pay VAT in Ukraine, and revenues from VAT on advertising services will bring the budget ₴3 billion per year.

The editor of AIN.UA has addressed requests to representatives of Facebook and Viber. Viber refused to comment, the Facebook press service promised to provide data, but at the time of publishing this article, there was no response.

It is worth noting that not many international companies that provide digital services are physically present in Ukraine. For example, Google has an office in Kyiv and has been registered in Ukraine as a VAT payer since 2007. Facebook, Valve, Viber, Amazon, Alibaba, and others have no registered legal entities in Ukraine.

Conclusions

Let’s summarize everything we’ve written before, by way of example. There is a Ukrainian company X, which advertises its services on Google and Facebook. If the bill is passed, the price of advertising on Google will not change for it, because Google already pays VAT, and includes it in the price of its services.

The prices of ads on Facebook will increase by 20% if the company pays them as a private individual. But individual employees of the company will face the fact that the subscription to Netflix and games on Steam have increased in price.

All this will only happen if Facebook, Netflix, and others register as Ukrainian VAT payers.

The editors of AIN.UA will follow the passing of this bill. We will write more details about how it will work for individuals who use unadvertised digital services of foreign companies, a little later.

Why did the company choose Ukraine?

“There are many opportunities for the development of IT talents in Ukraine. We would also like to use the opportunities of the high level of Viber penetration in the Ukrainian market – 96% among smartphone users,” the company said.

When will the center be launched?

The company plans to launch its R&D center in early Q2 2020 in Kyiv. The location of the office will be announced soon. The center will be launched “from scratch,” the company has no plans on partnership or acquisition of local teams for launch.

How many people will work in the office?

The company does not mention the exact number of employees, indicating that at first, it will be a small team with growth potential in 2020.

What kind of specialists will be hired?

The company will mainly look for IT engineers in several fields: they will work on Rakuten’s services, including Rakuten Viber, Rakuten Marketing, and Rakuten Intelligence.

• The Deputy Minister Oleksandr Bornyakov, Valeria Ionan, as well as Executive Vice President of Rakuten Yasufumi Hirai and Chief Operating Officer Ofir Eyal attended the meeting.
• According to the ministry, the company is interested in such areas of work as the development of the IT industry, work with the blockchain community, training of students, educational projects, and services for entrepreneurs.
• Earlier, we reported on the company’s plans to open a representative office in Ukraine. The first employee of the Ukrainian office appeared at Rakuten Viber back in June 2019.

The editor of AIN.UA expects comments from representatives of the Ukrainian office of Viber, about the time of opening, number of employees, specialization of the center.

The information was confirmed in the company, but not completely, indicating that Kyiv already has a business development manager who will work with Viber customers. The company’s CEO, Djamel Agaoua, emphasized that this is the first step in expanding the business in the country.

“Rakuten Viber views Ukraine as a strategically important market: more than 95% of smartphone owners in the country have installed Viber. We have just been joined by our first employee in Ukraine – head of business development department. He will work from Kyiv and develop partnerships and work with clients of the company. This is only the first step in expanding the company’s business in the country.

The upcoming visit of our employees to Ukraine fully reflects the plans of Rakuten aimed at forging strong partnerships with market participants and developing the company’s ecosystem,” he noted.