Ukraine President Volodymyr Zelensky has signed legislation into law for the implementation of several BEPS and other measures, which were approved by parliament in January 2020. The Law on Amendments to the Tax Code of Ukraine to improve tax administration and eliminate technical and logical inconsistencies (Law No. 466-IX) was published in the Official Gazette on 22 May 2020. With the final version signed into law and published, the effective dates of various measures are set, with some important changes compared to earlier versions.
Some of the key measures and their effective dates include the following:
Further to the above, new rules are put in place with effect from 1 January 2021 to provide that if a transaction with a non-resident related party is not at arm's length, the resulting transfer pricing adjustment would be considered a dividend-equivalent payment subject to 15% withholding tax. Other payments to non-residents will be considered dividend-equivalent payments as well, including cash or non-cash pay-outs by Ukrainian companies to non-resident shareholders in the case of a charter capital decrease, shares buyouts, shareholder withdrawals from the company, and other similar transactions that effectively decrease the retained earnings of a Ukraine company.
Note - A prior report on the law's approval in parliament has been updated to reflect the final effective dates of the measures following the law's publication in the Official Gazette.
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