Income payments of non-residents with a source of origin from Ukraine

State Tax Service has strengthened control over international tax minimization schemes, including through relationships with non-resident related parties.

Currently, the income payments of non-residents with a source of origin from Ukraine are used as a basis for withdrawal of funds: 137 billion UAH of income was transferred abroad only in the first half of 2021, of which 4 billion UAH of tax was accrued as payable.

STS considers that up to 20% of payments are risky, ie payments were made in favor of non-residents who are not beneficial (actual) owners of income, in favor of unregistered permanent establishments of non-residents in Ukraine or as a result of entity’s analysis the STS sees abuse of conventions in order to obtain tax benefits.

Significant payments are made to companies registered in the Republic of Cyprus, the Kingdom of Netherlands, the United Kingdom and Germany – these are payments in the form of dividends, interest, royalties, etc.

One of the tools for gathering evidence of violations in income payments to non-residents is an exchange of tax information with the competent authorities of foreign countries.

As of today, an effective communication with foreign countries has been established, so the completeness, quality and efficiency of providing requested information by the competent authorities has increased significantly, which allows to quickly test tax evasion risks in the future.

76 final responses have already been received in 2021, most of which have confirmed probable risks.

Income tax of foreign legal entities in the amount of 300 million UAH has already been additionally accrued.

It is expected that about 2 billion UAH will be additionally accrued due to the planned audits by the end of this year.

The evidence base for additional accrual of 1 billion UAH has been collected.

STS draws the taxpayers’ attention that voluntary clarification of the paid amounts of income tax from the non-residents’ income will allow business to reduce a burden of paying penalties that are accrued during the control and verification work.

Communicate with the State Tax Service remotely using the “InfoTAX” service