Ukraine joined the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports
14/11/22
The State Tax Service of Ukraine has recently announced that Ukraine joined the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports on 3 November 2022. This step will enable the local tax authorities to automatically exchange Country-by-Country reports prepared by multinational enterprise (MNE) groups.
Country-by-Country Report of a MNE group is an element of three-tiered transfer pricing documentation submitted by the MNE entities if the aggregate consolidated income of such MNE group exceeds the equivalent of 750 million euros for the year preceding the reporting year, and in the presence of additional circumstances provided for by the Tax Code of Ukraine (article 39.4.10).
The template and procedure for completing such a Report was approved by the Ministry of Finance in Order dated 14 October 2020.
Companies in Ukraine - members of MNE groups - obliged to complete Country-by-Country reports are required to submit the first reports for the financial year (reporting calendar year) ending in 2021 within 12 months after the end of such financial year. Therefore, the deadline for filing Country-by-Country reports is different for different companies and may reach 31.12.2022 (depending on the date of the end of the financial year in a particular MNE group). I.e. reporting deadlines vary between companies and may be up to 31 December 2022, depending on the financial year end in the MNE group. At the same time, the State Tax Service has yet to clarify the report submission deadlines for taxpayers whose 12-month period after the end of the financial year in 2021 ended before the date of signing this Multilateral Competent Authority Agreement. We expect that this requirement will not apply retrospectively.
Country-by-country reporting will allow the tax authorities of Ukraine to automatically receive comprehensive information on MNE group transactions in specific jurisdictions, in particular details of allocation of income and profits between MNE group entities in each jurisdiction, as well as to carry out an effective analysis of the volume and structure of operations, the specifics of the MNE group business activities for the purposes of transfer pricing control.
PwC experts are ready to provide further details on automated exchange of Country-by-Country reports, support with their practical application for transfer pricing purposes and assist in preparation of Country-by-Country reports.
