I’m delighted to welcome you to our international tax cooperation forum.
This is the first international event organized by the National Bank of Ukraine
and Ukraine’s Finance Ministry with the support of the OECD, USAID and the
World Bank in order to discuss the introduction of an action plan to counter
base erosion and profit shifting (BEPS) in Ukraine.
I’m pleased to see a full audience of representatives of businesses, the
banking sector, the expert community and government authorities. This is a
clear sign that effective tax regulation and international cooperation in this
area is high on Ukraine’s reform agenda. The #BEPSinUA
Forum will enable learning from the best world practices on how to tackle BEPS
and enforce long-term business transparency.
I’d like to express my thanks to the
representatives of the Global Forum on Transparency and Exchange of Information
for Tax Purposes that are present here for their great help with organizing the
event and promise to give us full support with implementing the initiatives
that will be discussed at this forum.
Why is the NBU interested in the topic of taxation?
As you surely know, the NBU is responsible for delivering financial
stability. Financial stability is a broad notion which is not limited to a
stable banking system. It’s about the stable, reliable and effective operation
of the entire financial system and, consequently, about the financial
transactions conducted by real economy companies.
This year the NBU approved a strategy that has seven strategic goals for
the coming years, each of which concerns financial stability in one way or
I will dwell on one them – transitioning to the
free flow of capital. Today we’re within sight of achieving this goal. Early this summer, the Law
On Currency and Currency Operations was adopted. This law, which has
been nicknamed "visa-free travel for capital," well deserves it name.
This law envisages that all existing restrictions will be gradually removed,
and eventually FX transactions in Ukraine will be conducted on the principle
that “everything that is not expressly forbidden by law, is allowed.”
Businesses and households will be finally able to decide for themselves
when and how to carry out FX transactions, without any restrictions and without
having to obtain permission from the NBU. As a result of the passing of the
law, FX regulation will promote economic growth rather than hinder economic
relations, as has been the case for the last 25 years that the FX Regulation
Decree has been in force.
This law, which is now only on paper, will be put into practice in three
months. However, one should bear in mind that a transition to the free flow of
capital won’t happen overnight. Since the NBU’s key task is delivering
macroeconomic and financial stability in Ukraine, any further easing of FX
rules will become possible only under the right conditions.
One such condition is effective tax regulation. At present, the full-scale
liberalization of the FX market is being prevented by the lack of other
regulatory instruments to replace existing FX restrictions designed to prevent
capital outflows to countries with zero or low rates of corporate income tax.
Resolving this problem requires implementing the
BEPS Action Plan Drafted
by OECD and G20 to address the global financial turmoil, this 15-action package
is intended to help close out gaps in international tax regulation and
reconcile tax legislation disparities between various countries acting as safe
havens for concealment of corporate income and its artificial shifting to
low-tax jurisdictions where companies do not engage in economic activity.
Over the past three years, 123 countries have already started to integrate
the BEPS Action Plan into their domestic tax laws. Ukraine officially joined
them at the start of last year. But the road ahead is long and winding.
The MoF and NBU have
recently published a draft law intended to implement 8 out of 15 BEPS Action
Plan guidelines in Ukraine
We have chosen the steps most critical to ensuring financial stability in
disclosure by Ukrainian resident individuals of holdings in controlled foreign
corporations (CFCs), and CFC taxation rules
imposition of limits on related-party transaction expenses
prevention of abuse of double-taxation agreements
prevention of artificial evasion of permanent establishment status
8–10: elaboration of controls over transfer pricing
13: introduction of country-by-country reporting rules for multinational
Thus, we hope this draft law receives the wide support of MPs and is
submitted for consideration by the Verkhovna Rada by
the end of this year.
At the same time, this is only a part of the package of actions that are
meant to put in place effective tax regulation in Ukraine. In the modern-day
global economy, financial flows traverse country borders with ease, and no
country can single-handedly conduct effective tax regulation.
Along with the BEPS Action Plan, Ukraine plans to
join a multilateral agreement on the automatic exchange of financial
information under the common reporting standard (also known as CRS).
As it stands now, 104 countries have adopted the CRS, signing close to
3,500 bilateral agreements. All EU countries, including our immediate
neighbors, are already exchanging such information in a practice that provides
an enormous boost to their tax evasion combating capabilities.
Ukraine must not wait on the sidelines as this process unfolds. CRS-related
legislative amendments are already pending approval by the Verkhovna
Rada. Their expedited adoption will bring about a technical capability for the
implementation of decisions that are necessary to launch the information
Before I give the floor over to our esteemed guests – who will talk about
their real-world experiences making capital stay “at home” and keeping profits
in the country of origin – let me emphasize that the BEPS Plan of Action and
the CRS do not constitute a push to place a heavier tax burden on businesses. These
initiatives pursue quite a different goal: that of ensuring the introduction of
unified requirements for transparency of doing business in Ukraine under
If Ukrainian businesses wish to enter the international market as
full-fledged players, undaunted by either scrutiny from foreign counterparties
or KYC by banks, Ukrainian businesses must play by the same rules as businesses
in Europe. It will make Ukrainian companies a welcome guest in the external
market, increase Ukraine’s investment prospects and boost its economic growth.
for your attention. I wish you interesting and fruitful discussions.