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23 November 2016

Ministry of Finance of Ukraine announced Ukraine to join OECD Base Erosion and Profit Shifting (BEPS) Action Plan

On 22 November 2016, the Ministry of Finance of Ukraine announced Ukraine to join OECD Base Erosion and Profit Shifting (BEPS) Action Plan starting from 1 January 2017.

According to the Ministry, Ukraine committed to implement four Plan’s Actions, namely:

  • Action 5: Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance
  • Action 6: Preventing the Granting of Treaty Benefits in Inappropriate Circumstances
  • Action 12: Mandatory Disclosure Rules
  • Action 14: Making Dispute Resolution Mechanisms More Effective

In order of implementation, amendments to the Tax Code of Ukraine and, in specific cases, to double tax treaties should be made. At the time, however, there are no respective bills registered in the Verkhovna Rada of Ukraine. It could be expected, in light of the Ministry’s announcement, that those will be drafted by the Ministry and brought into the Parliament in 2017.

BEPS Action Plan was developed by OECD and G20 and includes fifteen actions aimed at fighting tax avoidance practices used by multinational enterprises involving tax base erosion and shifting of profits to jurisdictions with lower or no taxation. Since 2016, the Plan has been actively implemented by countries around the world; 88 countries (including Ukraine) have joined the Plan so far.

Note that there is still no commitment as to joining system of automatic exchange of information in tax matters under Common Reporting Standard (CRS).

We closely monitor the process and will timely update you with any changes.

For more information, please contact Serhiy Verlanov.

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