Ukraine should ensure the taxation of profits where additional value is created, and also abolish harmful preferential treatment.
The Ukrainian government has developed a road map for the implementation of the OECD plan to counteract the erosion of the tax base (the BEPS plan). This is reported in the Ministry of Finance.
Ukraine joined the BEPS plan on January 1, 2017 and pledged to implement the so-called minimum plan standard – four events out of fifteen.
Revision of harmful tax practices or preferential treatment (BEPS Action # 5).
Improvement of agreements on avoidance of double taxation and inclusion in them of rules on prevention of abuse of the agreement (action №6 of the plan BEPS).
Improvement of existing legal norms on transfer pricing and information exchange (BEPS Action 13).
Improvement of agreements on avoidance of double taxation and enhancement of the effectiveness of dispute resolution mechanisms (BEPS Action # 14).
First, during the period 2017-2018. Ukraine undertook to analyze the existing preferential regimes. In particular, relief for businesses that provide management services, coordination and control of business activities; For enterprises that conduct financial and leasing activities; Enterprises engaged in the purchase and resale of goods; For banking and insurance institutions. Regimes of intellectual property, holding companies, funds management will also be reviewed.
Secondly, the government until 2019 intends to renegotiate more than 70 agreements on avoidance of double taxation. According to the BEPS plan, the agreement should adhere to the rules for limiting benefits and rules for checking the main goal. Accordingly, some payments between residents of the two countries may lose tax benefits and be fully taxable in the country from which the payment is made.
Thirdly, Ukraine should have a legal and administrative system to provide entrepreneurs with access to information on tax regimes in different countries. In addition, Ukraine should join the system of automatic information exchange.
Fourth, the government undertook to review and, if necessary, revise the procedure for reaching a mutual agreement.
The Finance Ministry is confident that the implementation of the BEPS plan will allow Ukraine to counteract aggressive tax planning, erosion of the tax base and the removal of profits from taxation.