Enabling Ukrainian Telco’s to Compete Internationally

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Ukrainian mobile operators are reliable and consistent investors, forming more than 1.5% of GDP, contributing to the development of new technologies and services for Ukrainian people and adding more then 16,6 billion UAH directly to the budget from 3G and 4G tenders.

Following direction of Ukraine and EU integration together with visa-free regime development, such services as roaming, international calls and international traffic transit are becoming more and more important for all Ukrainian subscribers. Unfortunately, Ukrainian mobile operators are facing additional tax burden, decreasing the intention to provide such international services and discriminating us comparing to foreign operators.

Receiving a revenue from the international calls, roaming services and traffic transit (export of services) Ukrainian operators are forced to lose the share of VAT credit. As a result, it increases abovementioned international services price for Ukrainian citizens and making Ukrainian operators none-competitive on transit market, as international operators doesn’t face a "non-refundable VAT" issue. The opportunities for Ukrainian operators to export this high-tech service and bring in foreign exchange revenues into the country is negatively impacted.

We propose to make necessary and logical changes to the 185.1, 195.1.3 and 198.5 paragraphs of the Tax Code of Ukraine, providing Ukrainian operators the possibility to compete on international market. Such changes will lead to:

  • the emergence of the opportunity to become the main traffic transit hub in Eastern Europe;
  • increase the investment attractiveness of the industry;
  • increase foreign exchange income of the country;
  • reduction of the barrier for Ukrainian subscribers to communicate with the world;
  • development of digitalization of Ukraine;

We are looking forward for an early solution of this issue in cooperation with responsible authorities.

Selcuk Simsek

Chamber Mobile Telecom Committee Expert

Chief Financial Officer

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