Ukrainian Tax Alert | May 2020
On May 23, 2020, the Law 466-IX came into force, introducing fundamental changes to “rules of game” in Ukrainian tax sphere. The Law has entered into force starting from May 23, 2020 (except for some amendments that will come into force starting from Jule 1, 2020 and January, 2021).
The Law introduces number of changes important for companies involved in cross-border activity. Most of the changes are in line with OECD Action Plan on addressing BEPS (Base Erosion and Profit Shifting).
Among the important changes are:
- Introduction of Group transfer pricing reporting for large multinationals and new requirements for transfer pricing documentations;
- Taxation of Controlled Foreign Companies (CFC) profits in Ukraine;
- “Principal purpose test” introduction related to application of double tax treaties;
- “Business purpose test” for operations with non-residents;
- Strict rules related to non-resident acting via permanent establishments. Changes to calculation of profits of permanent establishments;
- Taxation of payments treated as “de-facto dividends” (“second tier” transfer pricing adjustments);
- Changes in thin capitalization rules;
- Cancellation of VAT exemption for soybean and rapeseed;
- Number of changes related to penalties for tax violations.
Mazars Team realizes that new Law requires multinationals to put significant efforts and align their business practices with new requirements. Our TAX team is ready to provide you with assistance throughout the whole process.
