On 6 February 2024, the State Tax Service of Ukraine issued a release outlining the mandatory reporting of controlled foreign companies. The State Tax Service of Ukraine informs that the campaign for submission by controlling persons of Reports on controlled foreign companies for reporting periods 2022 and 2023 is ongoing.
495 Reports on controlled foreign companies and 405 Reports on controlled foreign companies in the abbreviated form were received during 2023. For tax control purposes on taxation of profit of controlled foreign companies, the accounting (tax) period is a calendar year or other accounting period of controlled foreign companies ending within a calendar year. The first reporting (tax) year is 2022 (if the reporting year does not correspond to a calendar year – the reporting period starts in 2022).
Report on controlled foreign companies must be submitted simultaneously with the submission of annual property and income declaration (for individuals) or corporate income tax declaration (for legal entities):
- until 1 May 2024 for individuals;
- until 1 March 2024 for legal entities.
To the report on controlled foreign companies, duly certified copies of financial reporting of controlled foreign companies must be attached, which confirm the amount of profit of controlled foreign companies for the reporting (tax) year.
Sub-paragraph 392.5.2 Paragraph 392.5 Article 392 of the Tax Code of Ukraine (hereinafter – Code) stipulates that if the deadline for preparing financial reporting in a relevant foreign jurisdiction is later than the deadline for submitting annual property and income declaration or corporate income tax declaration, such copies of the financial reporting on controlled foreign company is submitted together with annual property and income declaration or corporate income tax declaration for the next reporting (tax) period.
Herewith, the Report on controlled foreign companies contains all necessary information on the results of activities of controlled foreign companies for the relevant reporting period (according to accounting data and/or interim financial reporting).
Also, if such person does not have opportunity to ensure the preparation of financial reporting on controlled foreign company and/or calculation of adjusted profit of controlled foreign company before deadline for submitting annual property and income declaration or corporate income tax declaration, such person submits report on controlled foreign company in the abbreviated form, which contains only information provided by Sub-paragraphs “a” – “c” of Sub-paragraph 392.5.2 Paragraph 392.5 Article 392 of the Code.
|P In case of submission of a Report on the controlled foreign company in the abbreviated form, the controlling person is obliged to submit the full Report by the end of the calendar year following the reporting (tax) year. It must be remembered that a Report on a controlled foreign company is submitted for each controlled foreign company separately and exclusively in electronic form.
At the same time, Paragraph 120.7 Article 120 of the Code establishes financial responsibility for tax violations, in particular:
- Non-submission of a report on a controlled foreign company entails imposition of a fine in the amount of 100 amounts of the subsistence minimum for able-bodied persons on January 1 of the tax period (302 800 UAH in 2024);
- Untimely submission by the controlling person of a report on a controlled foreign company entails imposition of a fine in the amount of 1 amount of subsistence minimum for able-bodied person established by the law on 1 January of the tax year for each calendar day of non-submission, but not more than 50 amounts of subsistence minimum for able-bodied person established by the law on 1 January of the tax year (up to 151 400 UAH in 2024).
At the same time, Sub-paragraph 54 Sub-section 10 Section XX of the Code establishes that:
- Financial sanctions and penalties for violating requirements of Article 392 of the Code determining and calculating the profit of the controlled foreign company are not applied for results of the reporting (tax) years 2022 – 2023;
- According to the results of reporting (tax) years 2022 – 2023, administrative and criminal liability for any violations related to the application of provisions of Article 392 of the Code are not applied to the taxpayer or officials.
