Developments Related to Controlled Foreign Companies (CFC) Reporting
On 01 July 2024, the Law of Ukraine No. 3706-IX “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding the Peculiarities of Exporting Certain Types of Goods During the Period of Martial Law” shall come into effect.
The Law postpones imposition of penalties for violations related to CFC reporting. Taxpayers shall not be liable for, in particular:
- Failure to submit or untimely submission of the CFC report;
- Failure to include in the CFC report the information about CFCs and/or indicators mandatory under Clause 39².5.3 of the Tax Code of Ukraine (amount of income (revenue) from the sale of goods (works, services), profit from operating activities and profit before tax, calculation of adjusted profit of the CFC, grounds for exemption from taxation of the CFC’s profit etc);
- Failure to notify within the timeframes determined by the Tax Code of Ukraine on acquisition or disposal of a share in a CFC, of commencement or termination of actual control over such entity.
Taxpayers and their officials shall not be subject to administrative and criminal liability for violations related to application of CFC rules.
Information and documents received by the tax authorities under CFC rules are restricted information. These cannot be requested by law enforcement agencies and be considered as evidence in criminal proceedings.
The period of limitation for imposition of the tax liability based on the information contained in the CFC report (seven years) shall start from the date of submission of the respective CFC report to the tax authority.
For further information please contact Dmytro Ivanusa, Partner at divanusa@mazurivanusa.com