Results of the State Tax Service in the successful implementation of the BEPS and GAAR steps

State Tax Service uses implemented steps of the BEPS Plan and GAAR rules, concentrating control tools in a single direction, in particular, such as control over transfer pricing, payment of passive income, activities of non-residents and controlled foreign companies, which, in turn, aimed at countering aggressive schemes of international tax planning used by business entities with the aim of eroding the tax base and withdrawing funds abroad.

Significant results have been achieved in this area of the State Tax Service.

Thus, during the years 2015-2023, 1 052 business entities submitted clarifying declarations and increased the tax base by 32.1 billion UAH, which led to the accrual of.8 billion UAH of the corporate income tax and a reduction in losses by 11.7 billion UAH.

102 documentary audits on compliance with the "arm's length" principle were conducted (during 2015-2023), as a result of which 1.7 billion UAH of the income tax was added and losses were reduced by 7.5 billion UAH. Taking into account the appeal of tax notices-decisions, 440 million UAH of the income tax was received to the budget, agreed losses according to the acts amounted to 3.7 billion UAH.

More than 1 205 facts of violation by taxpayers of requirements of tax legislation (during 2015-2023) regarding the timeliness and completeness of declaration of controlled operations, submission of documentation from sales pales were established, and fines of 320 million UAH were applied.

Due to the introduction of amendments to the Tax Code of Ukraine in terms of expansion of the concept of "dividends", which came into force on 01.01.2021, and the explanatory work carried out by taxpayers, 287 million UAH of the income tax of non-residents ("constructive dividends") was additionally paid to the budget.

From 2021 to the present, the  income of non-residents tax in the amount of 5.8 billion UAH has been added. At the same time, additional payments to permanent representative offices of non-residents amounted to 40.8 million UAH.

In general, since the introduction of tax control in the transfer pricing direction and international taxation, the budget received additional 3.7 billion UAH, and losses were reduced by 15.4 billion UAH.

Since the beginning of 2022, the State Tax Service has received 6 134 Notifications on the acquisition of ownership, registration and sale/liquidation of a foreign controlled company or establishment without the status of a legal entity.

Also, together with the Ministry of Finance of Ukraine, work was carried out to amend current conventions on avoiding double taxation in terms of revising rules and rates of taxation of passive income of non-residents. In particular, amendments were made to the conventions with the Netherlands, Austria, and Switzerland, which led to an increase in the tax rate from 0 to 5 percent.

In 2022, the State Tax Service has, as a competent authority of Ukraine, joined the Multilateral Agreement of Competent Authorities on the Automatic Exchange of Reports Across Countries. Currently, measures are being taken to introduce an automated system of exchange of reports across the countries of the international group of companies.

State Tax Service took part in development of provisions of the Law of Ukraine No. 2970-ХХ as of 20.03.2023 "on amendments to the tax code of ukraine regarding  implementation of the international standard for automatic exchange of information on financial accounts", which contains certain changes and clarifications regarding definition of the MGC and filing CbC reports.

A consistent policy regarding implementation of the steps of the BEPS Plan, GAAR rules and concentration of trade centers, control over activities of non-residents, controlled foreign companies, passive income into single effective tool for control over the rules of international taxation is successful and corresponds to the best global practice.

At the same time, the State Tax Service continues to work on the implementation of international innovative and effective solutions that improve taxation system of Ukraine and maintains a high level of cooperation with experts from the OECD, OTD of the US Treasury Department, the World Bank, the IMF and other organizations that note the high professional level of specialists.