Advertising on TikTok for LLCs: How to Confirm Expenses and Avoid Problems with the Tax Office

Companies are increasingly using social networks to promote goods and services. One of the popular advertising channels has become TikTok, but enterprises have questions about the proper documentation of such expenses: whether advertising can be included in expenses, which documents confirm business activities, which KVED codes are required, and how non-resident services are taxed.

Can an LLC include TikTok advertising in expenses?

As experts noted, an enterprise has the right to include in expenses any costs related to promoting products/goods/services on the market to customers, including advertising on TikTok.

According to paragraph 19 of the National Accounting Standard (NAS) 16 "Expenses", selling expenses include, in particular, advertising and marketing research costs related to the sale of products, goods, works, or services.

Thus, expenses for an advertising campaign on TikTok can be accounted for in the enterprise’s accounting records provided there is proper documentary evidence.

What documents are needed to confirm expenses?

To prove the connection of advertising expenses with the company’s activities, it is recommended to prepare internal documents.

It is advisable to specify the purpose of the advertising campaign, responsible persons, and the advertising budget in an order.

If the advertising is paid through a TikTok business account, the enterprise effectively enters into a public contract with a non-resident.

Supporting documents may include:

• invoices;
• electronic bills;
• payment documents;
• other electronic documents generated by the service.

The 7eMinar portal recommends keeping advertising materials posted on TikTok to confirm their connection with the enterprise’s business activities in case of an audit.

How are TikTok advertising services taxed?

If a company pays for TikTok advertising to a non-resident, such a transaction is considered the purchase of electronic services.

According to subparagraph 14.1.56-5 of the Tax Code of Ukraine, electronic services include, in particular, advertising placement services and provision of advertising space on the Internet.

Since the service recipient is a Ukrainian enterprise, the place of supply of such services according to Article 186 of the Tax Code of Ukraine is the customs territory of Ukraine.

In this case, the service recipient must determine VAT tax liabilities according to Article 208 of the Tax Code of Ukraine. The tax invoice is issued based on the first event — either the payment date or the date of the document confirming the supply of services (e.g., invoice), whichever occurs first.

The tax invoice should indicate:

• conditional TIN — 500000000000;
• name of the non-resident;
• country of its registration;
• reason type — 14.

In the VAT declaration, such a transaction is simultaneously reflected as tax liabilities and, if the tax invoice is registered on time, as tax credit.

In the VAT declaration, this transaction is reflected simultaneously:

• in line 6.1 — in the month the tax invoice is issued;
• in line 13.1 — if the tax invoice is registered on time.

Is repatriation tax required?

When paying for TikTok electronic advertising services to a non-resident, repatriation tax is not withheld.

Such payments are considered payment for services rendered and are not subject to taxation according to subparagraph "k" of subparagraph 141.4.1 of the Tax Code of Ukraine.

Accordingly, such transactions are not reflected in the appendix to the profit tax declaration.

Conclusion

LLC expenses for TikTok advertising can be included in the enterprise’s expenses if they are related to business activities and supported by proper documents.

At the same time, when purchasing advertising services from a non-resident, it is necessary to consider VAT taxation rules, the procedure for issuing a tax invoice, and reflecting the transaction in reporting.

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