Beginning in 2020, Ukraine will start automatic exchange of information on financial accounts under the OECD’s Common Reporting Standard (CRS), the Ministry of Finance’s official website has announced citing Finance Minister Oleksandr Danyliuk. The first exchange will take place in respect of information collected as of the end of 2019.
According to CRS standards, financial institutions (such as banks, custodians, investment entities etc.) are required to collect information on the financial accounts of customers in order to determine their tax residence(s) and report to the tax authorities. The tax authorities may then share this information to fiscal authorities of jurisdiction(s) where the account holder has its tax residence (if there are activated exchange relationships between financial institutions and the account holder’s jurisdictions).
The information subject to exchange includes name of account holder, its jurisdiction(s) of residence, tax identification number, account balance as of end of the year, and other relevant information. In certain cases, information is also collected in respect to the account holder’s controlling persons.
In line with this automatic exchange, the Ukrainian tax authorities can receive information on foreign financial accounts owned by Ukrainian tax residents. Furthermore, according to the National Bank of Ukraine, adoption of international standards for the automatic exchange of tax information will allow for the gradual relaxaton of administrative FX restrictions currently effective in Ukraine.
However, no draft law aimed at implementing CRS has been registered in Parliament yet.
As of today, 95 jurisdictions have signed the Multilateral Competent Authority Agreement in order to set up CRS exchange relationships. The full list of the activated exchange relationships is available at the OECD website.
Apart from the above, the Finance Ministry has also announced that Ukraine will sign up to the BEPS Multilateral Instrument by the end of 2017. This will simultaneously change a number of double taxation treaties entered into by Ukraine in order to strengthen anti-tax avoidance regulations.