State Tax Service of Ukraine Reports on its Work on the Implementation of the BEPS Plan and GAAR Rules

The State Tax Service of Ukraine has published statistics of its work in the field of combating harmful schemes of international tax planning, which are used for the purpose of eroding the tax base and withdrawing funds abroad, starting from 2015.

According to the press service of the STS, the body combines control tools for transfer pricing, payment of passive income, activities of non-residents and controlled foreign companies – steps, which necessary for regulation of the tax field of the state.

The Service has reported some current results in numbers:

1) In 2015-2023, 1,052 business entities submitted clarifying declarations and increased the object of taxation by UAH 32.1 billion, which led to the accrual of UAH 2.8 billion in corporate income tax and a reduction in losses by UAH 11.7 billion.

2) During this period, 1052 documentary checks on compliance with the principle of an “outstretched hand” were made, according to the results of which UAH 1.7 billion of income tax was added, and losses were reduced by UAH 7.5 billion. Taking into account appealed tax notifications-decisions, UAH 440 million of income tax were received, agreed losses according to the acts amounted to UAH 3.7 billion.

3) More than 1205 facts of violation of tax legislation requirements for timeliness and completeness of controlled operations declaration and submission of transfer pricing documentation were established, penalties in the amount of UAH 320 million were applied.

4) Thanks to the introduction of amendments to the Tax Code of Ukraine on the concept of “dividends”, which came into effect on January 1, 2021 , taxpayers additionally paid UAH 287 million of income tax of non-residents to the budget (“constructive dividends”).

5) From 2021 to the present, income tax of non-residents in the amount of UAH 5.8 billion has been surcharged. Surcharges to permanent representative offices of non-residents amounted to UAH 40.8 million.

6) In general, since the introduction of tax control in the field of transfer pricing and international taxation, UAH 3.7 billion have been added to the budget, and losses have been reduced by UAH 15.4 billion.

7) Since the beginning of 2022, the STS has received 6,134 reports on the acquisition of ownership, registration and sale/liquidation of a foreign controlled company or formation without the status of a legal entity.

The press release also mentions other areas of work. Together with the Ministry of Finance of Ukraine, the STS is working on improving conventions on the avoidance of double taxation, revising the tax rates of passive income of non-residents. Thus, tax rates increased from 0 to 5 percent in accordance with conventions with the Netherlands, Austria, and Switzerland.

In 2022, the STS, as a competent authority of Ukraine, joined the Multilateral Agreement of Competent Authorities on the Automatic Exchange of Reports by Countries (CbC). Currently, it is focusing its efforts on the launch of an automated system for exchanging reports by the countries of the international group of companies. As part of the implementation of CbC at the legislative level, the STS took part in the development of Law of Ukraine No. 2970-IX “On Amendments to the Tax Code of Ukraine on the Implementation of the International Standard for Automatic Exchange of Information on Financial Accounts”.

Press release of the State Tax Service