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This incentive is applied both to the supply of software products created by Ukrainian companies and to the supply of products of international companies (including operating systems). VAT TAXATION ON ROYALTIES Royalty is any payment received as a reward for using or granting the right to use any intellectual property, including computer programs (sub-subparagraph 14.1.225 of paragraph 14.1 of Article 14 of the TCU). According to Art.196 of the TCU, transactions on paying royalties in cash is not subject to VAT. VAT TAXATION ON EXPORT OF DEVELOPMENT/TESTING SERVICES According to Art.185 of the TCU, operations on the supply of goods, the place of supply of which is located in the customs territory of Ukraine, are subject to VAT taxation. That is, the place of supply of services is of key importance. At the same time, in accordance with para.186.3 of Art.186 of the TCU, the place of supply of software development/testing services, data processing services and services on providing advice on informatization, providing information and other services in the field of informatization, including the ones related to the use of computer systems is considered to be the place, at which where a service recipient is registered as a business entity. That is, operations on export of software development services and related services are not subject to VAT taxation, since their place of supply is located outside the customs territory of Ukraine. Based on the above, we can conclude that VAT almost does not affect the companies in the software development market. In the light of the general volatile VAT situation in Ukraine, we believe that such regulation is favorable for all market participants.

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Green Book "Software Development Market Regulation"  
Green Book "Software Development Market Regulation"  
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