Submission of the Country-by-country report of the international group of companies for the first time

Taxpayers – residents of Ukraine belonging to the international group of companies in cases defined by Sub-paragraph 39.4.10 Paragraph 39.4 Article 39 of the Tax Code of Ukraine (hereinafter – Code) are obliged to submit the Country-by-country report of the international group of companies to the central executive body that implements state tax policy in the electronic form in compliance with requirements of the Laws of Ukraine "On electronic documents and electronic document management" and "On electronic trust services".

Country-by-country report of the international group of companies is submitted if the total consolidated income of the international group of companies, which includes the taxpayer, for financial year preceding the reporting one, is calculated according to accounting standards used by the parent company of the international group of companies (in the absence of information according to international accounting standards), is equal to or exceeds relevant indicator of the minimum size of the consolidated income, determined by Sub-paragraph 39.4.10² of Paragraph 39.4 Article 39 of the Code, in particular, equivalent of 750 million euros and more.

Circumstances in the presence of which the Country-by-country report of the international group of companies is submitted, in particular:

⎯ taxpayer is the parent company of the international group of companies;

⎯ parent company of the international group of companies authorizes the taxpayer – resident of Ukraine to submit such Report of the international group of companies;

⎯ legislation of jurisdiction of tax residence of the parent company does not require submission of Report of the international group of companies from such international group of companies;

⎯ between Ukraine and the corresponding foreign jurisdiction of tax residence of the parent company of the international group of companies, there is an international agreement in force containing provisions on the information exchange for tax purposes, but relevant QCAA agreement (agreement providing for the automatic exchange of Reports of the international group of companies) has not entered into force as of the date of end of financial year for which Report of the international group of companies must be submitted;

⎯ between Ukraine and the corresponding foreign jurisdiction of tax residency of the parent company of the international group of companies, there is an international agreement in force containing provisions on the information exchange for tax purposes, but there are facts of systematic non-fulfillment of relevant QCAA agreement.

Report of the international group of companies is compiled for the fiscal year established by the parent company of the international group of companies, which may not coincide with the calendar year, and is submitted not later than twelve months after the last day of such fiscal year (in the absence of information about the fiscal year established by the parent company of the international group of companies – within twelve months after end of the calendar year).

The first reporting period for submitting Report of the international group of companies (Paragraph 53 of Sub-section 10 Section XX of the Code) is:

for residents of Ukraine – parent companies of the international group of companies – financial year ending in a period from January 1 to December 31, 2022;

for the rest of taxpayers – financial year that begins in a period from January 1 to December 31 of year in which the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (hereinafter – Multilateral Agreement CbC) entered into force with at least one foreign jurisdiction.

That is, for residents of Ukraine – parent companies of the international group of companies, the first reporting period is reporting year2022, and the last day of submission is January 1, 2024 (taking into account that deadline falls on a holiday).

Form of Report of the international group of companies and procedure for filling it out were approved by Order of the Ministry of Finance № 764 as of 14.12.2020 "On approval of the form and Procedure for filling out Country-by-country report of the international group of companies."

Liability of taxpayers for non-submission (late submission) of Report of the international group of companies, including clarifying and/or for providing inaccurate information, is provided for in Article 120 of the Code.

As an example, fines for the taxpayer’s non-submission of Report of the international group of companies for year 2022 amount to 2 481 thousand UAH.

It should be noted that if the controlling body detects error in submitted Report of the international group of companies or receives notification of such errors from a competent authority of another jurisdiction on the basis of the QCAA agreement, it notifies the taxpayer of the need to correct errors or clarify information in submitted Report of the international group of companies. In such case, the taxpayer is obliged to submit revised Report of the international group of companies with appropriate corrections or to provide explanation by the electronic communication means according to procedure provided for in Article 42 of the Code, not later than 30 calendar days from the date of receipt of the controlling body's notification.

It should be noted that temporarily, for a period until termination or abolition of the martial law, there are special rules for holding taxpayers accountable for violations of tax legislation.

Norms of the Code (Paragraph 69 of Sub-section 10 Section XX of "Transitional Provisions") determine that if the taxpayer does not have opportunity to fulfill tax obligations in a timely manner, in particular, with regard to submission of reports, such taxpayer is released from the responsibility provided for by the Code with mandatory fulfillment of such obligations within six months after termination or abolition of the martial law in Ukraine.

Procedure for confirming the taxpayer's possibility or impossibility for performance of obligations specified in Sub-paragraph 69.1 of Paragraph 69 Sub-section 10 Section chapter XX "Transitional provisions" of the Code and list of documents for confirmation was approved by Order of the Ministry of Finance № 225 as of 29.07.2022.

Taxpayers who prepare Report of the international group of companies are advised to review presentation materials on the algorithm for filling it out.