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Ukrainian Parliament Approves BEPS Measures

Thursday, February 6, 2020

On January 16, 2020, Ukraine's parliament approved legislation that would implement several anti tax base erosion and profit shifting (BEPS) measures.

According to a summary of the legislation (bills no. 1209 and 1210), the main BEPS-related changes include:

  • New limits on the deductibility of interest expenses;
  • The introduction of new controlled foreign corporation (CFC) rules;
  • The expansion of transfer pricing documentation requirements, based on the three-tier transfer pricing documentation regime proposed by the OECD;
  • The implementation of recommendations from the OECD under Actions 8-10 of the BEPS Action Plan, including transfer pricing regime changes relating to intangible assets and commodity transactions; and
  • New rules to enable Ukraine to process Mutual Agreement Procedure requests, to resolve cross-border double taxation.

The legislation also includes measures aimed at enhancing the administration of the tax system, particularly by clarifying the list of tax offenses, and in particular those related to VAT refund fraud, and amending tax penalty procedures.