Analytics

“Constructive dividends”: Is the amount exceeding the arm’s length price of goods purchased from a non-resident subject to non-resident income tax under the Tax Code of Ukraine?

11 June, 2026 Newsletters

We have previously examined the issue arising from the absence of a “consolidated” version of the Tax Code of Ukraine that would have the status of an official, authentic text and unequivocally reflect the actual content of its provisions as of a particular point in time.

At the outset, it should be noted that the existing consolidated versions of the Tax Code (including the version available on the website of the Verkhovna Rada of Ukraine), reflecting the law as of specific dates, are undoubtedly useful and valuable working tools.

However, such texts are “derivative” compilations based on numerous legislative acts adopted by the Verkhovna Rada of Ukraine and, like any compilation or consolidation, carry the risk of discrepancies, distortions, or errors in incorporating individual amendments into a consolidated text.

Therefore, consolidated versions that have not themselves been adopted or approved by the Verkhovna Rada in that exact form cannot be regarded as authentic texts of the legislative act.

Previously, we examined, in particular, the differences in the wording of paragraph 201.10 of the Tax Code across various sources, as well as legislative shortcomings regarding the grounds for taxpayers to include in their tax credits VAT amounts from tax invoices containing errors in the codes of the Ukrainian Classification of Goods for Foreign Economic Activity.

Following our publication, the consolidated text of the Tax Code available on the official website of the Verkhovna Rada of Ukraine was corrected by removing the respective subparagraph of paragraph 201.10, which had in fact been repealed by the legislature long ago.

As it turned out, however, that episode is not the only instance in which the same provision of the Tax Code is presented differently across various sources, including the website of the Verkhovna Rada of Ukraine, widely used private legal databases, and printed publications.

Another example, which is the focus of this article, concerns the rules governing the taxation (or non-taxation?) of so-called “constructive dividends” in the form of the value of goods purchased from certain non-residents in excess of the amount consistent with the arm’s-length principle.

The full version of the article is available in Ukrainian by the link.

Kind regards,

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