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Country-by-Country Reporting: Form and procedure of submission

authors: Ivan Shynkarenko, Viktoriia Shevchenko, Daria Kachan

05 March, 2021 Exclusive

The Order of the Ministry of Finance of Ukraine as of December 14, 2020 No. 764 entered into force on February 19, 2021. The Order approves the form and the procedure for submission of Country-by-Country Reporting of the international group of companies (the Report) following the provisions of subpara. 39.4.10 para. 39.4 Article 39 of the Tax Code of Ukraine.

This Report, which is an object of automatic exchange of tax and financial information, is a part of the reporting chain to be submitted by the taxpayers belonging to the international groups of companies, in cases stipulated by the Tax Code of Ukraine. In doing so, Ukraine is implementing the BEPS Action Plan 13, according to which the three-level structure of documentation prepared by large multinational enterprises (MNEs) shall consist of a Local File, Master File and Country-by-Country Reporting.

But keep calm: for the first time, the Report is submitted for the financial year ending in 2021, but not earlier than the year in which the competent authorities joined the multilateral agreement on the automatic exchange of interstate reports (Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports). Thus, the taxpayers will submit this Report for the first time not earlier than 2022, but only if Ukraine joins the abovementioned Agreement soon. For now, the exact terms of Ukraine's joining to the Agreement are unknown. This is confirmed by information from the website of the Organization for Economic Cooperation and Development (the OECD), which states that Ukraine “has not yet been required to commit to a date to commence exchanges and has not yet decided on such a date”, i.e. there is no specific “deadline” for signing the Agreement by our country. Factors that inhibit the process of joining to the Agreement are a long process of adopting the legal framework and software and hardware unpreparedness of the Ukrainian tax authorities for such automatic exchange of interstate reports.

So, let`s consider, who is required to prepare the Report, when it is filed and in what form, what information is to be included in the Report, and what penalties are applied by the supervisory authority in connection with the Report. ...

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