Within the European Union and the Organisation for Economic Co-operation and Development, a system of automatic information exchange regarding income generated through digital platforms has long been in place. The introduction of these rules, known as DAC7, has for several years been viewed as one of the key elements of tax reform in Ukraine.
In its legal essence, DAC7 is an amendment to the Directive on administrative cooperation in the field of taxation (Directive 2011/16/EU), which establishes obligations for digital platforms to collect and submit information, as well as defines the procedure for the automatic exchange of such information between tax authorities of different jurisdictions. The principal legislative act governing DAC7 is Council Directive (EU) 2021/514. In practice, DAC7 imposes obligations on operators of digital platforms to collect, verify and annually transmit to tax authorities data concerning sellers, their income and identifying information. The collected information is automatically exchanged between the tax authorities of the EU Member States. Importantly, DAC7 does not introduce new taxes or modify existing tax rates; its purpose is to enhance transparency, ensure proper reporting and facilitate effective information exchange.
In April 2025, the Government of Ukraine presented Draft Law No. 13232, aimed at integrating the country into the global system of automatic information exchange. The draft law introduced reporting obligations for operators of digital platforms regarding user income and envisaged the creation of an infrastructure for data exchange between Ukrainian tax authorities and the tax authorities of foreign jurisdictions. We closely monitored the development of this initiative, as its implementation could significantly affect the taxation framework for a broad range of taxpayers. However, subsequent developments were unexpected: on 17 July 2025, the draft law was withdrawn. This effectively returned the regulatory environment to a state of uncertainty, as the country still lacks a legislatively approved mechanism for implementing DAC7. Although no official explanation was provided for the withdrawal, we believe it was driven by the need to refine technical procedures, harmonise Ukrainian regulations with the approaches of the European Union and the Organisation for Economic Co-operation and Development, and address the practical challenges associated with adapting to the new requirements.
Nevertheless, the withdrawal of the draft law does not signify a departure from the state’s commitment to international tax transparency. On the contrary, we are convinced that rules analogous to DAC7 will inevitably be introduced in the near future, as Ukraine’s integration with the European Union requires a gradual expansion of automatic information exchange. Accordingly, the need to implement relevant procedures has not disappeared.
In this context, taxpayers once again find themselves in a zone of regulatory uncertainty. Platform operators active in the Ukrainian market should already recognise that the long-term development of the digital economy is inseparable from the implementation of transparency standards requiring accurate collection, retention and transmission of user income data. Those who proactively align their systems with international requirements — particularly with respect to verification procedures, due diligence, data protection and internal accounting — will be better positioned once the new rules come into force.
For a complete understanding, it should be clarified that a platform is to be understood as a professional operator providing an online tool or service through which users (sellers, service providers, lessors) can generate income. In other words, a platform acts as an intermediary between users and the market and has the technical and organizational capabilities to collect data on users’ income and identification information. In legal terms, DAC7 defines a platform as any organization or company (legal entity) that: allows users to sell goods or provide services through a digital interface; controls, administers, or otherwise provides access to the market for these users; and receives a fee or commission for providing this service (often, but not necessarily). Conversely, the following are not considered platforms: government authorities (DAC7 does not regulate the work of tax authorities as “platforms”); ordinary individuals or individual sellers, who are platform users, not the platform itself; companies that do not act as intermediaries but sell goods or services without creating a market for other users.
For sellers, service providers and landlords using digital platforms, the prospective introduction of DAC7 means a need for more meticulous income documentation, a review of accounting policies and a reassessment of the tax implications of their activities. Self-employed individuals and small businesses will need to adjust to increased transparency and the obligation to provide information that may previously have remained outside the scope of attention of the tax authorities. While such changes may be burdensome, some relief mechanisms may apply in specific cases, and the transition to systematic accounting may even simplify certain aspects of taxpayers’ operations.
In our view, the withdrawal of Draft Law No. 13232 is more likely a temporary technical step than a political decision. Legislators remain committed to introducing international transparency standards but appear to be seeking a more balanced and technically consistent solution. For this reason, we recommend that platforms, entrepreneurs and other taxpayers begin preparing for these requirements in advance — by conducting internal income audits, organising their accounting records, reviewing contracts with counterparties, analysing their business models and preparing for future information exchange obligations.
Potential implications for taxpayers may also include the necessity for platforms to implement new reporting systems, user verification procedures and data transmission processes, which will require substantial technical and organisational adjustments. For sellers, entrepreneurs and small businesses, this will entail increased tax transparency, the obligation to maintain accurate income records and a possible revision of business models and accounting policies, particularly where income has not been declared previously — which will inevitably result in additional tax exposure.
Therefore, despite the temporary slowdown, the direction of development of Ukraine’s tax system remains clear. The implementation of rules similar to DAC7 is only a matter of time. As such, taxpayers now have a unique opportunity to prepare in advance and establish the foundations for efficient, transparent and predictable operations within a digital economy that is increasingly integrated into the European regulatory space.
Author: Dmytro Dovzhyk, Attorney at Law and Partner at ArtesLex
28.11.2025
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