If you closely cooperate with (act for) a non-resident company, then under certain conditions, the new rules for taxation of permanent establishments of non-residents may apply directly to you.
1. How have the attributes using which an entity (person) is recognised as a non-resident's permanent establishment changed?
First, the time limits to consider when recognising an entity (person) as a permanent establishment have changed and so has the procedure for calculating the timeline. Additionally, the attributes indicating that the person has actual authority exercised for the benefit of a non-resident have been supplemented. E.g., the use of a non-resident’s corporate email address by a person for communication with the non-resident or third parties may suggest that there are attributes of a permanent establishment.
Additionally, the procedure for calculating the profit of a non-resident’s permanent establishment has changed and penalties have increased for failure to register a permanent establishment. Changes concerning permanent establishments are in effect from 23 May 2020.
2. Can a person-owner of a controlled foreign company (controlling person) be recognised as a non-resident's permanent establishment?
Such person may not be recognised as a non-resident’s permanent establishment.
3. Since when will the new accounting rules for non-residents apply?
Non-residents operating in the territory of Ukraine that have registered/licensed their separate subdivisions, including permanent establishments, in the territory of Ukraine before 23 May 2020 and that are not registered with tax authorities as of 1 July 2020 should, within 3 months, submit documents for their registration with tax authorities.
Tax audits to verify compliance with non-resident accounting requirements may be scheduled from 1 January 2020. Following the audit, a tax authority will register a non-resident if the audit confirms that the non-resident operates through a permanent establishment. Furthermore, a tax authority will take measures to de-register a separate subdivision (permanent establishment) if the audit confirms that the non-resident has discontinued its business in Ukraine.