The Ministry of Finance published new information (minfin.gov.ua):
At the Ministry of Finance of Ukraine, a working group is being created to implement a plan to combat strategies and practices of tax base erosion and income tax avoidance (hereinafter referred to as the BEPS Action Plan).
What is the point?
In order to ensure the implementation of Clause 11 of Article 16 of the Law of Ukraine «On Currency and Currency Transactions» and the Action Plan for the Implementation of the BEPS Action Plan, a working group is being created to develop draft laws that will determine:
- rules of taxation of controlled foreign companies;
- reporting rules by country for international groups of companies;
- rules for limiting expenses for financial transactions with related parties;
- rules of taxation of permanent establishment;
- measures to prevent abuse in connection with the application of treaties on the avoidance of double taxation;
- the procedure for settling disputes on the application of conventions on the avoidance of double taxation;
- implementation of international standards for automatic information exchange;
- making changes to the Tax Code of Ukraine regarding transfer pricing control (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 allow us to effectively counteract aggressive tax planning, erosion of the tax base and the removal of profits from taxation. The BEPS plan represents a single rule of the game that helps fight speculation and creates a level playing field for all players. The implementation of the Plan is a positive signal for investors. This will stimulate international trade and contribute to the growth of our economy,» said Deputy Minister of Finance Serhiy Verlanov.
For reference:
- Due to gaps and inconsistencies in national and international tax laws, international companies reduce or avoid their income tax obligations. Thus, revenues to the budget are lost. To avoid this, on January 1, 2017, Ukraine joined the Enhanced Cooperation Program within the framework of the Organization for Economic Cooperation and Development (OECD) initiative.
- OECD member countries have developed the BEPS Action Plan, designed to combat base erosion and tax-evasion.
- The BEPS Action Plan includes 15 steps covering various areas of combating aggressive tax planning. There are 4 steps that Ukraine must implement (the minimum standard of the BEPS Action Plan):
- Step 5: «Improving measures to combat tax abuse»;
- Step 6: «Preventing the abuse of benefits provided for by bilateral agreements»;
- Step 13: «Recommendations on transfer pricing documentation and information disclosure by country»;
- Step 14 «Improving the mutual agreement procedure through dispute resolution.»
