In order to implement the "Base erosion and Profit Shifting" plan (hereinafter BEPS), an international project of the Organization for Economic Cooperation and Development (OECD) and the G20 countries to develop measures to combat base erosion and profit shifting, in 2020 Ukraine introduced the Rules on a three-tier structure of transfer pricing reporting (hereinafter - TPR).
According to these rules, in addition to local TPR documentation, some categories of taxpayers must also prepare a master file and a country-by-country report (hereinafter - Report). And if the first reporting period for the master file was recorded as 2021, then the requirements for the Report are first applied also for 2021, but not earlier than the year in which the competent authorities concluded a multilateral agreement on the automatic exchange of interstate reports. 3 On November 3, 2022, the State Tax Service of Ukraine (hereinafter referred to as the STS) joined this agreement, namely the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (hereinafter referred to as the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports - МСАА СbС). This agreement entered into force in July 2024. The introduction and exchange of country-by-country reports are provided for by the provisions of Step 13, which is an integral part of the minimum standard of the BEPS action plan, which Ukraine has undertaken to implement. More than 100 countries around the world have already joined the international system of automatic exchange of country-by-country reports.
In fact, this means that 2024 will be the first reporting period for which Ukraine will exchange country-by-country reports. To be more precise, in accordance with the provisions of paragraph six of subparagraph 39.4.10 of paragraph 39.4 of Article 39 of the Tax Code of Ukraine (hereinafter the Code), if a taxpayer resident in Ukraine belongs to an international group of companies (hereinafter the MCC), the parent company of which is a tax resident of the United States, then such a taxpayer, subject to the fulfillment of the criteria provided for in subparagraph 39.4.102 of paragraph 39.4 of Article 39 of the Code, must submit a report by MCC country in compliance with the deadline specified in subparagraph 39.4.11 of paragraph 39.4 of Article 39 of the Code, for the fiscal year starting from January 1 to December 31, 2024, Since IN ACCORDANCE WITH the provisions of paragraph six of paragraph 53 of subsection 10 of Section XX of the Code, the МСАА СbС entered into force in 2024.
The submission of the Report is mandatory for international groups of companies (hereinafter referred to as IGCs) with a total consolidated group revenue of more than 750 million euros for the previous financial year, despite the fact that the parent company in the USA independently submits the CbCR report for 2024, which includes information about Ukraine.
If a Ukrainian company is a member of such a group, it is obliged to submit the Report in the following cases:
- the parent company of the GC does not submit a CbCR in its jurisdiction,
- there is no automatic exchange of information between Ukraine and the country of the parent company,
- the Ukrainian company is recognized as an authorized participant for submitting the Report.
The first reporting period under the updated rules (for non-resident parent companies) is the 2024 financial year. The deadline for submitting the Report is December 31, 2025. The penalty for failure to submit or untimely submission of the Report is 1,000 PMPO (for the reporting year 2024 it is UAH 3,028,000). The penalty for submitting an incomplete or inaccurate Report is 1% of the amount of income in respect of which a violation was committed (but not more than UAH 500,000 for each jurisdiction).
As of 2025, Ukraine has signed agreements on the automatic exchange of СbCR with more than 100 countries, including the EU countries, the UK, Canada, Australia and most major economies. The first data exchange will take place in 2025 based on the Reports submitted for 2024. Information on Ukraine’s inclusion in the list of jurisdictions that have signed the multilateral CBCR agreement is posted on the OECP website.
At the same time, the agreement with the US has not yet been signed, which leads to the need to submit a CbCR report for 2024 by Ukrainian taxpayers whose parent company is registered in the US.
However, the concern is not the fact of submitting a CbCR report for 2024 by Ukrainian taxpayers, but the excessively complicated rules for its submission in Ukraine. Thus, in accordance with the Order of the Ministry of Finance of Ukraine No. 764 “On Approval of the Form and Procedure for Filling in the Report by Country of an International Group of Companies” dated December 14, 2020 (hereinafter referred to as the Order of the Ministry of Finance No. 764), Ukrainian taxpayers must:
- submit separate reports by country (Appendix 1 to the Report by Country of an International Group of Companies);
- submit a list of participants in an IGC by jurisdiction (state, territory) (Appendix 2 to the Report by country of an international group of companies),
- provide the names and addresses of the participants of the MGC in Ukrainian.
Such rules for compiling the report are excessively complicated due to the fact that the CbC report received from the parent company, which generally meets the requirements of the Country-by-Country Return XML Schema (v2.0), which is approved by the OECD, Ukrainian taxpayers will need to technically process it in order to submit it to the State Tax Service as separate files of Appendix 1 and Appendix 2, as well as supplement the report with a translation into Ukrainian of the names and addresses of the participants of the IGC.
Regarding the completion and submission of a report by country of an international group of companies
The features of completing and submitting a report by country of an IGC are regulated by the provisions of the Order of the Ministry of Finance dated 14.12.2020 No. 764 “On Approval of the Form and Procedure for Filling in the Report by Country of an International Group of Companies” (hereinafter referred to as Order No. 764), which is approved by the State Tax Service, which, in accordance with subparagraph 60 of paragraph 4 of the Regulation on the State Tax Service of Ukraine, approved by the Resolution of the Cabinet of Ministers of Ukraine dated 06.03.2019 No. 227 (as amended), ensures the development, implementation and technical support of information and communication systems and technologies, automation of procedures, organizes the implementation of electronic services for business entities, and ensures the functioning of the electronic office.
According to the provisions of Clause 8, Section I of Order No. 764, the country-by-country report of the IGC is generated using an XML schema based on the requirements of the Country-by-Country Return XML Schema (v2.0), which is officially approved by the OECD.
The XML schema of the country-by-country report of the IGC with a corresponding description of the file structure and all its structural elements and attributes (their name, format, data type, etc.) is published on the official web portal of the State Tax Service.
