Ukrainian chamber of tax advisers
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Ukrainian chamber of tax advisers
Important Questions

Who are the tax advisors (consultants)?

Tax Advisor (consultant) is a specialist in the field of financial accounting, tax legislation and related spheres. The main purpose of its activity is a minimization of risks of legal entities individuals in the sphere of taxation...

Workshop "How to start business?"

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On October 30, 2019 Verkhovna Rada of Ukraine ratified the Protocol amending the Convention between the Government of the Republic of Cyprus and the Government of Ukraine for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income”.
Abovementioned Protocol significantly influences taxation of some types of business operational between residents of Ukraine and Cyprus. Of utmost importance are amendments in terms of taxation of dividends and capital gains.
Taxation of dividends – article 10 of the Convention:

Who are the tax advisors (consultants)?

This is one of the most prestigious and highly paid professions in many countries.

Tax Advisor (consultant) is a specialist in the field of financial accounting, tax legislation and related spheres. The main purpose of its activity is a minimization of risks of legal entities individuals in the sphere of taxation...

In the wake of benegficial owner

Analysis of litigation practice on beneficial owner concept application in Ukraine (the article in available in Ukrainian and Russian version).

Interview with the Chief of Chamber of Tax Advisors of Kyrgystan

The article is available in Russian version...

12 Steps of Closing Charity Fund in Ukraine

The article is available in Ukrainian and Russian versions...

BEPS Project - prospects for Ukraine

BEPS – is an initiative of the G20 and the OECD countries, for which on the agenda is the question of losses from aggressive tax planning applied by multinational companies. Some taxpayers thoroughly uses the absence of appropriate instruments of cooperation between states and their tax authorities in matters of taxation.

The adoption of the action plan BEPS - it is rather a recommendation for establishing effective mechanisms and measures for countries that are willing to lead its legislation that uniform standards, and because it is not a legal act, each government can decide to accept them or not. Ukraine, which is not a member of the OECD or G20, now can participate in working groups and in regional associations of representatives of the tax authorities, because Ukraine is a member of the Intra-European Organization of Tax Administrations (IOTA).

Issues of phenomenon of BEPS is relevant for Ukraine, which now on the way to reform its tax system and implementation of European standards of tax administration. Clearly, the BEPS project aims to halt the erosion of the tax base and output taxable income from the country with a high tax burden to the jurisdictions where income is taxing at a reduced rate or not taxed at all (Eng. - Base erosion and profit shifting).

According to Gavin Ekins, a specialist in the field of economic research of organization of Tax Foundation (USA), the program BEPS is successful because many countries in the framework of the action plan and have agreed to automatically exchange of information for better interaction of tax authorities, including in matters of transfer pricing.

So, Multilateral Competent Authority Agreement, which was the initiative of the OECD, has brought together 78 countries. The relevant agreements are apply for implementation (CRS) reporting standards and automatic exchange of information.

Moreover, all OECD members countries have signed this agreement except Israel, Turkey and the United States.

We can say that the idea of cooperation is a progressive for the purposes of advocacy the interests of members-countries, and that meet modern challenges of doing business internationally. Thus, in October 2015 the OECD published a final report with justification of 15 actions to prevent the process BEPS.

However, there are some questions on whether Ukraine should follow the advice of the action plan within BEPS? In fact, the tax legislation Ukraine is difficult and "unstable", and if it can be burdened with additional obligations and requirements it may scare investors.

Clearly, it makes sense to implement the "correct" and "feasible" initiatives, especially if on this will insist partner countries. Our country may actually apply the following BEPS's recommendation – strengthening measures to combat not only the double taxation, but the double non-taxation issue.

So, the multinational companies have learned to successfully use the terms of agreements on avoidance of double taxation and use them not only as a tax optimal business conditions, but as opportunities to avoid paying taxes all where (in any jurisdiction). This feature of the openness of information and its single base (one of the initiatives within BEPS), may be useful for governments for making informed and cost effective solutions in the field of taxation.

In order to start the action plan of BEPS, need timely, specific and objective information that enable governments to quickly identify areas of risk. And auditing, in this case, is the main source of relevant information.

For example, the French government have concerned by some activities of BEPS. The French Budget State Secretary Mr.Christian Eckert said that France supports the automatic reporting if other countries simultaneously will take corresponding conditions, but noted that the implementation of such decisions must be simultaneous for in all countries. As for the big companies reporting on their activities in each country, the French government refused to accept it, because it objectively can hurt competitiveness of country.

This approach demonstrates the criticality of perception proposals BEPS by some countries - EU members, and at the same time the understanding of the need to establish effective international cooperation on tax matters, which is important for Ukraine.

As a result of adoption of requirements of BEPS, there is a high probability that the different types of foreign companies in Ukraine could be subject to more thorough checks and obtaining various kinds of requests from the tax authorities. Ukrainian tax realities is already linked to high fiscal pressure on honest taxpayers, the majority of which is the representations of foreign companies.

Therefore, compliance with BEPS for Ukraine must become not just a PR-event in order to confirm the desire of the state to apply a new tax policy, it shall be measured as a step which help to won in image and economic achievements.

Nataliya Povtar,

specially for the Chamber of Tax Advisors of Ukraine

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