On 17 December 2020, the Ukrainian Parliament has accepted a tax reform bill, which contains important changes to recently implemented BEPS legislation. The following important changes were introduced related to recently implemented BEPS and other provisions:

• The amended definition of permanent establishment (PE) would come into effect on 1 January 2021 instead of 23 May 2020, including the requirement that all PEs need to compute their taxable income according to the arm’s length principle;
• Tax authorities would earn more powers when evaluating transactions, and the bill would strict necessities for substantiation of the business purpose of transactions subject to transfer pricing regulations;
• The new CFC rules will effective from 1 January 2022 instead of 1 January 2021. The bill also introduces a grace period from 2022 to 2023;
• Thin capitalization rules would only apply to loans received from both related and unrelated nonresidents;
• The bill introduces withholding tax at the rate of 15%. This rate will be applicable on gains derived by nonresidents from indirect transfer of shares deriving most of their value from real estate situated in Ukraine, and would be postponed until 1 January 2021; and
• The provisions permitting the tax authorities to deny the deduction of expenses incurred in transactions with no business purpose would be postponed until 1 January 2022.