International partners noted Ukraine’s achievements in implementing the BEPS plan

Press service of the State Tax Service of Ukraine, published 25 September 2020 at 08:44 Chapter: News

Today was the final day of international two-day online conference “Implementation of the BEPS plan in Ukraine” organized by the State Tax Service of Ukraine.

The purpose was to evaluate already taken measures, obtained results and development of projects for further implementation of the BEPS plan.

The defining moment on this path was the adoption of the Law of Ukraine as of 16.01.2020 № 466-IX “On Amendments to the Tax Code of Ukraine to improve tax administration, eliminate technical and logical inconsistencies in tax legislation” which entered into force on 23.05.2020 and introduced a number of fundamental changes aimed at combating the tax base erosion and withdrawal of profits from taxation.

During the conference, participants discussed issues of tax control over international operations and transfer pricing in Ukraine and the world; importance of international exchange of tax information and practical assistance between countries and international organizations.

Modern realities have changed the conditions for business. There is a need to change administration of taxes, due to the expansion of companies’ ability to provide services and trade remotely (online). Under such conditions, in order to compete fairly and eliminate the unfair advantages of foreign companies over domestic companies, foreign companies must register and be the value added tax payers.

Participants shared their experience regarding features of joint and simultaneous audits. For its part, the State Tax Service of Ukraine has confirmed its readiness to gain practical experience on this issue.

Peculiarities of application of transfer pricing methods were discussed, taking into account Ukrainian peculiarities of controlled operations with raw materials, nomenclature goods of primary processing, intangible assets and financial operations.

Conference participants had the opportunity to discuss “thin capitalization”; features of choosing the “tested party”; to test “business purpose” through the prism of so-called concept of the non-recognition of commercially unacceptable things; identification of permanent establishments, etc.

It is obvious that the next task for Ukraine is to form zero tolerance to tax evasion, which will help to increase level of tax discipline of international counterparties.

To achieve goals, the State Tax Service identified the need of:

- separation of national and international tax risks creating a comprehensive system of compliance with tax legislation;

- ensuring confidentiality during the exchange of information and transition to an automated mode of exchange; 

- providing appropriate technical capabilities and qualified motivated staff.

Participating international partners noted that Ukraine had taken significant steps and continued to actively implement its commitments towards implementation of the BEPS Action Plan. Their readiness to continue partnership relations with Ukraine in this area by providing practical and methodological assistance was also confirmed.

Reference.

BEPS Action Plan (Base Erosion and Profit Shifting) is a project of the Organization for Economic Cooperation and Development (OECD) / “Group of Twenty” to address problems of erosion (understatement) of the tax base and income transfer, which was presented by the OECD and approved in September 2013 at the G20 Summit. This Plan contains 15 steps, the development of which will result in the provision of domestic and international instruments, through which tax rights will be brought into the line with economic activities of international corporations.