Representatives of the State Tax Service took part in the XIII Tax Forum

Representatives of the State Tax Service of Ukraine at invitation of the Association of Lawyers of Ukraine took part in the XIII Tax Forum – platform for experience exchange between experts in the tax law, representatives of state authorities, judges, heads of law firms and business.

Participants particularly discussed renewal of trust towards regulatory and law enforcement agencies, renewing tax audits, etc. Of particular interest was discussion of the international taxation practices. After all, control over the transfer pricing, controlled foreign companies, taxation of non-resident incomes, activities of non-residents (including permanent representative offices) and exchange with foreign competent authorities is important and effective tool for protecting economic interests of our state, as well as means of blocking double or discriminatory taxation.

During the meeting, innovations used by the State Tax Service in carrying out tax control over the transfer pricing were discussed, specifically use of modern technologies and development of the IT solutions:

Information Communication System Big Data TP, which will allow to quickly process large data sets, minimize "human factor", etc.;

introduction of automatic exchange of country-by-country reports (CbC) of international group of companies as a measure of implementation of Step 13 of the BEPS Plan "Country-by-country reporting", which will allow obtaining comprehensive information regarding activities of the international groups of companies across specific jurisdictions for effective analysis of volumes, structure of operations and specifics of activities.

The focus is on mattters related to intangible assets, financial operations (in particular, bonds) and intragroup services in controlled operations.

Attention was focused on the application by the State Tax Service of integrated approach in the organization of measures to identify potential controllers of the controlled foreign companies, namely: analysis of reporting discipline, completeness and reliability of information reflected in reports by the controlled foreign companies, analysis of financial reporting indicators, transfer pricing documentation, primary documents from the controlled foreign companies, open information sources, etc., which has already made it possible to identify more than 3000 controllers of the controlled foreign companies, of which about 50 percent after compliance measures, so that more than 100 million UAH of the personal income tax was already reported and paid to the budget.

Those present at the forum also discussed the need to make changes to the Tax Code of Ukraine, in particular: introduction of new rules regarding hybrid differences; improvement of taxation rules of taxation for the controlled foreign companies; "thin capitalization"; capital gains when assets are withdrawn (Exit tax); GAAR rules, improvement of the transfer pricing rules and other matters related to improving taxation system, which will contribute to the development of investment climate aimed at reconstruction of the country in war and post-war times.