Tetiana Lysovets on Implementation of the BEPS Plan in Ukraine

Tetiana Lysovets on Implementation of the BEPS Plan in Ukraine

The Yuridicheskaia Praktika, No. 40, 1 October 2019. Tetiana Lysovets’s comment on the article “Excessive BEPS. Legislative amendments in terms of implementation of the BEPS plan materially beyond the minimum standard may turn out to be too much for business and regulatory authorities”.

...According to Tetiana Lysovets, an attorney at law and Senior Partner at Sokolovskyi and Partners Law Firm, taxation of the profit of the controlled foreign companies (step 3) in draft law No. 1210 is provided for in Article 392 (which may supplement the Tax Code of Ukraine) at the level of the controlling party (an individual or a legal entity). The assessment basis for the individual income tax due form the profit of the controlled foreign company shall be reduced by the amount that has already been paid by the controlled foreign company. I

t is determined in proportion to the controlling party’s share in the controlled foreign company. The expert also draws attention to the penalties prescribed by draft law No. 1210. In particular, significant fines are planned for violation of the rules for transactions with the controlled companies: for instance, 1,000 minimum wages for failure to submit a report; 500 minimum wages for failure to submit a notice of acquisition/alienation/commencement of actual control over the share in the foreign legal entity. “Thus, the under-reformed tax authorities will get a power instrument of pressure on business.

The fiscal officers are also given a lot of freedom to determine the person deemed to exercise actual control at their discretion (Clause 392.1.6). As you know, when our tax authorities have lots of powers, there will definitely be corruption and more pressure,” Mrs Lysovets comments.

 

Practices