Ukraine publishes draft tax and transfer pricing law to implement BEPS provisions

Ukraine’s Ministry of Finance and the National Bank of Ukraine have published a draft amendment to the tax code designed to implement international tax and transfer pricing provisions in the 2015 OECD/G20 base erosion and profit shifting (BEPS) plan outcomes.

“[T]he adoption of this draft law will allow for Ukraine to avoid being deemed the country that does not cooperate on taxation issues. This will also expand the possibilities for Ukrainian businesses to conduct full activity in external markets, while avoiding the prejudice of foreign counterparties, banks, and investors,” said Kateryna Rozhkova, First Deputy Governor of the National Bank of Ukraine, commenting on October 24.

The Ukraine draft tax law would implent the following BEPS actions:

  • Action 3: disclosure of holdings in controlled foreign corporations (CFCs) by individuals residing in Ukraine and CFC taxation rules
  • Action 4: on related party interest expense and other financial payments
  • Action 6: preventing tax treaty abuse
  • Action 7: preventing the artificial avoidance of permanent establishment status
  • Actions 8–10: transfer pricing
  • Action 13: country-by-country reporting

The new law is proposed to enter into force on January 1, 2020.

As a member of the “Inclusive Framework on BEPS,” a colation of 123 countries, including all OECD and G20 countries, Ukraine has pledged to incorporate into its laws “minium standards” outlined in the 2015 BEPS agreements, including laws implementing country-by-country reporting on multinationals and curtailing tax treaty shopping. The draft law goes beyond the minium standards, though, incorporating reccomended best practices agreed to in the BEPS plan.

 

 

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