Ukraine | Amendments to the BEPS implementation plan were introduced

19/03/2021

On December 17, 2020 the Verkhovna Rada of Ukraine adopted the Law No. 1117-IX “On amendments to the Tax Code of Ukraine and other laws of Ukraine to ensure the collection of data and information required for the declaration of certain objects of taxation”, providing for:

  • postponing of reports submission regarding controlled foreign companies (CFCs*) for one year, meaning the first reporting period will be 2022;
  • the effect of the transitional amount thresholds in an increased amount for CFC purposes has also been postponed to 2022-2023;
  • penalties for violation of the rules for determining CFC profits based on the results of 2022-2023 do not apply;
  • amendments were made to the tax-free liquidation of CFCs – namely, the liquidation mass is exempt from taxes, military fees and this procedure does not apply to foreign companies and formations without the status of a legal entity if they are created after May 23, 2020;
  • the rule that a CFC can be registered as a resident of Ukraine has been postponed to 2022;
  • the business purpose test is applied not to all transactions with non-residents, but only in the following cases: sale / purchase of goods (works, services) with non-residents from low-tax jurisdictions or registered as a low-tax organizational legal form; royalty accrual operations in favor of non-residents (regardless of whether they are low-tax);
  • trusts, foundations, partnerships shall pay taxes and declare profits only when such profit is distributed in favor of individuals – beneficiaries.

How SCHNEIDER GROUP can help

If you would like to get more detailed advice on the regime provided for by Ukrainian legislation for CFCs, please contact SCHNEIDER GROUP legal experts in Ukraine.

* A controlled foreign company (CFC) is any legal entity or a formation without the status of a legal entity, registered in a foreign state or territory, which is under the control of an individual / legal entity that is a resident of Ukraine in accordance with the regulations determined by the Tax Code

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