The Ministry of Finance and the National Bank of Ukraine have published a comprehensive draft law “On Amendments to the Tax Code of Ukraine for Implementing the Plan on Base Erosion and Profit Shifting”. The draft law implements major steps of the Action Plan on Base Erosion and Profit Shifting (BEPS Action Plan). These steps, among other things, include rules on taxation of controlled foreign companies (CFC).
A legal entity qualifies as a CFC if it:
In some cases trusts, partnerships, funds and other entities lacking legal personality may also qualify as CFCs. An individual who is a resident of Ukraine is considered the controller of a CFC if he/she:
A controller is obliged to include the amount of the adjusted profit of a CFC into his/her gross annual taxable income.
The profit of a CFC is exempt from taxation in case all the following conditions are met:
The profit of a CFC is also exempt from taxation in Ukraine if the total income of all CFCs controlled by one Ukrainian resident is less than EUR 1 million, or the CFC is a public company.