The rules for conducting international business are changing
Nov 5, 2024 4:45:41 GMT
Post by sinthiya007 on Nov 5, 2024 4:45:41 GMT
And so, what many Ukrainian entrepreneurs feared happened - on January 16, 2020, Bill 1210 (“Law on CFC”) was adopted in the second reading, which is aimed at changing the rules of the game for international business.
The law introduces the concept of a controlled foreign company (CFC) and controlling persons, and also obliges them to inform the tax authorities of Ukraine about the foreign companies that these controlling persons own.
Clauses have been introduced that regulate the maintenance on page seo service and submission of reports on such CFCs, as well as the obligation to inform about the beginning or termination of participation in them. But the "icing on the cake" was the provisions on fines for failure to submit reports and failure to inform tax authorities, which are calculated on some cosmic scale - be it 2.3 or 4.7 million (!) hryvnia.
We have previously written about what a CFC is and about Ukraine's accession to the initiative of the Organization for Economic Cooperation and Development (OECD), which is called the BEPS plan and is aimed at combating tax evasion by taking advantage of discrepancies in international legislation. Let's go over the main points very briefly.
Briefly about the BEPS plan and its role for Ukraine
Ukraine joined the BEPS initiative in July 2018. In total, the BEPS plan includes 15 steps, but only 4 are mandatory, 2 of which Ukraine has already completed.
To date, as part of the implementation of the BEPS plan, information on beneficial owners of companies has already been disclosed in national legislation and transfer pricing rules have been established.
The next steps are to start exchanging tax information automatically (exchanging information according to the CRS standard) and to establish rules for CFCs (controlled foreign companies). These 2 steps will allow to start taxing the income of Ukrainian citizens found abroad.
For 2 long years, there was no visible progress towards implementing BEPS rules from our legislators. And then, at the end of 2019, they started talking about bill 1210, which already included the definition of CFC.
The law introduces the concept of a controlled foreign company (CFC) and controlling persons, and also obliges them to inform the tax authorities of Ukraine about the foreign companies that these controlling persons own.
Clauses have been introduced that regulate the maintenance on page seo service and submission of reports on such CFCs, as well as the obligation to inform about the beginning or termination of participation in them. But the "icing on the cake" was the provisions on fines for failure to submit reports and failure to inform tax authorities, which are calculated on some cosmic scale - be it 2.3 or 4.7 million (!) hryvnia.
We have previously written about what a CFC is and about Ukraine's accession to the initiative of the Organization for Economic Cooperation and Development (OECD), which is called the BEPS plan and is aimed at combating tax evasion by taking advantage of discrepancies in international legislation. Let's go over the main points very briefly.
Briefly about the BEPS plan and its role for Ukraine
Ukraine joined the BEPS initiative in July 2018. In total, the BEPS plan includes 15 steps, but only 4 are mandatory, 2 of which Ukraine has already completed.
To date, as part of the implementation of the BEPS plan, information on beneficial owners of companies has already been disclosed in national legislation and transfer pricing rules have been established.
The next steps are to start exchanging tax information automatically (exchanging information according to the CRS standard) and to establish rules for CFCs (controlled foreign companies). These 2 steps will allow to start taxing the income of Ukrainian citizens found abroad.
For 2 long years, there was no visible progress towards implementing BEPS rules from our legislators. And then, at the end of 2019, they started talking about bill 1210, which already included the definition of CFC.