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MoF and NBU Publish the Draft Law on Implementation of the BEPS Action Plan in Ukraine

24 October 2018

Press Release


The Ministry of Finance of Ukraine (MoF) and the National Bank of Ukraine (NBU) have published the draft Law of Ukraine On Amendments to the Tax Code of Ukraine for the Purpose of Implementing the Action Plan on Base Erosion and Profit Shifting to support Ukraine’s financial stability under transition to the free flow of capital, enhance the efficiency of tax regulation and introduce unified requirements to business transparency in Ukraine according to international standards.


The Action Plan on Base Erosion and Profit Shifting (the BEPS Action Plan) was developed by the Organisation for Economic Co-operation and Development (OECD) in 2015. According to the OECD, the losses in national budgets around the world due to base erosion and profit shifting (BEPS) amount to USD 100–240 billion annually, or 4–10% of the total yield from corporate income tax. In addition, the developing countries lose more from their budgets than the developed ones.


The BEPS Action Plan envisages 15 actions to fill the gaps in the international tax regulation and eliminate the discrepancies in the domestic tax laws of various countries that make it possible to conceal the corporate profit and shift it to low tax jurisdictions, where companies conduct no business activity. Over the last three years, 115 countries have already launched the implementation of the BEPS Action Plan into their domestic tax laws.


Ukraine started the preparation process to the implementation of the BEPS Action Plan in 2016. The draft Law published today has been developed by a working group led by the MoF, with the participation of the NBU, and with the participation and support of international experts in taxation. It incorporates the groundwork of an inter-agency working group chaired by the Head of the Parliamentary Committee on Taxation and Customs Policy, Nina Yuzhanina, who has been in charge of the draft law development since 2016, as well as the expert findings by the OECD and WB staff.


The draft Law is aimed at implementing 8 actions that are most critical for Ukraine:

      Action 3: disclosure of holdings in the controlled foreign corporations (CFCs) by individuals residing in Ukraine, and the CFC taxation rules

      Action 4: limitations for expenses in related-party transactions

      Action 6: preventing the abuse of double tax agreements

      Action 7: preventing the artificial avoidance of permanent establishment status

      Actions 8–10: elaboration of controls over transfer pricing

      Action 13: reporting rules for groups of international companies broken down by countries.


Enhancing the effectiveness of tax regulation according to the BEPS Action Plan is crucial to ensure financial stability in Ukraine under transition to the free flow of capital pursuant to the Law of Ukraine On Currency and Currency Operations.


"The full-scale liberalization of the currency regulation is held back by the lack of other regulatory levers, instead of the current currency restrictions, that would prevent the capital outflows to the countries with no or low corporate income tax. Once adopted, the proposed draft law will provide for such levers," emphasized Kateryna Rozhkova, First Deputy Governor of the NBU.


Moreover, the adoption of this draft law will allow for Ukraine to avoid being deemed the country that does not cooperate on taxation issues. This will also expand the possibilities for Ukrainian businesses to conduct full activity in external markets, while avoiding the prejudice of foreign counterparties, banks and investors.


"The operation under international transparency standards will let Ukrainian businesses become equal players in international markets, which will help them expand their presence abroad, improve Ukraine’s investment attractiveness, and fuel its economic growth. Thus, we hope this draft law receives wide support from MPs and is submitted for consideration by the Verkhovna Rada by the end of this year," noted Kateryna Rozhkova.


You can find the draft Law of Ukraine On Amendments to the Tax Code of Ukraine for the Purpose of Implementing the Action Plan on Base Erosion and Profit Shifting here.


Learn more on the BEPS Action Plan, world trends in taxation and business transparency, and the draft Law at https://bepsinua.bank.gov.ua.

Last modification   24.10.2018