A working group is being set up at the Ministry of Finance of Ukraine which will be responsible for the implementation of the plan for the prevention of tax-base erosion and profit-shifting strategies and practices (BEPS Action Plan).
What’s it about?
To ensure the implementation of paragraph 11 of article 16 of the Law of Ukraine “On Currency and Currency Operations” and the plan for the implementation of the BEPS Action Plan, a working group is being set up to develop draft laws which shall determine:
• Taxation rules for controlled foreign companies;
• Reporting rules by countries for international groups of companies;
• Rules for spending limits regarding financial operations with affiliated persons;
• Taxation rules for permanent representative offices;
• Steps to prevent manipulations related to the application of agreements on the avoidance of double taxation;
• Procedure for the settlement of disputes on the application of conventions on the avoidance of double taxation;
• Implementation of international standards for automated information exchange;
• Amendments to the Tax Code of Ukraine for the control of funds-transfer pricing (steps 8, 9, 10, 13 of the BEPS Action Plan).
“Our goal is to implement the minimum standard of the BEPS Action Plan, which will let us to effectively tackle aggressive tax planning, tax base erosion and profit shifting. The BEPS Action Plan stands for the unified rules of the game enabling us to fight speculations and to establish equal conditions for all actors. The implementation of the Plan is a positive signal for investors. It will stimulate international trade and contribute to the growth of our economy”, said Deputy Minister of Finance Sergiy Verlanov.
• Due to gaps and discrepancies in the national and international tax regulations, international companies reduce or evade their corporate profit tax obligations. It leads to losses for the state budget. To prevent it, Ukraine joined the Program for Extended Cooperation as part of the OECD initiative on January 1, 2017.
• OECD member states developed the BEPS Action Plan aiming to counter tax-base erosion and profit shifting.
• The BEPS Action Plan contains 15 actions covering various aspects of encountering aggressive tax planning. Mandatory for Ukraine (minimum standard of the BEPS Action Plan) are 4 actions:
• Action 5: “Countering harmful tax practices more effectively”;
• Action 6: “Preventing the granting of treaty benefits in inappropriate circumstances”;
• Action 13: “Transfer pricing documentation and country-by-country reporting”;
• Action 14 “Making dispute resolution mechanisms more effective”.