On 16 January 2020, the Verkhovna Rada of Ukraine adopted Law of Ukraine No. 466-ІХ “On Amendments to the Tax Code of Ukraine Regarding Improvement of the Administration of Taxes, Elimination of Technical and Logical Inconsistencies in Tax Legislation” (also known as Draft Law 1210). The President of Ukraine signed this law on 21 May 2020.
1. What changes are introduced by Law 466-IX (Draft Law 1210)?
This law concerns changes, in particular, in the following areas:
- implementation of the BEPS Action Plan into the Ukrainian legislation;
- improvement of the taxpayer’s electronic office, correspondence with tax authorities, administrative appeal procedures, etc.;
- changes to certain taxation rules for corporate income tax, personal income tax, unified tax, VAT;
- introduction of rules regarding a single legal entity in the structure of the State Tax Service of Ukraine, etc.
2. Who do the changes affect?
The changes affect, first of all, Ukrainian taxpayers engaging in transactions with non-residents, persons who own foreign companies, and non-residents for whom the law sets certain requirements. However, considering the scale of the changes, they will affect all taxpayers.
3. When will the changes become effective?
Most of the provisions of the law became effective on 23 May 2020. Certain provisions (e.g., regarding the taxpayer’s electronic office, accounting for non-residents) will enter into force on 1 July 2020. A number of changes (rules on controlled foreign companies, changes regarding liability, etc.) will apply with effect from 1 January 2021.
4. Will this law be amended in the near future?
Immediately after signing the law, the President of Ukraine addressed the Cabinet of Ministers with a number of proposals, in particular, suggesting to:
(А) give taxpayers enough time to ensure the collection of data and information required for filing tax returns in accordance with the rules on controlled foreign companies;
(B) reduce fines for certain minor tax offenses; and
(C) ensure the protection of data and information received by tax authorities from the reporting on income, in particular, obtained from sources outside Ukraine, as well as data obtained from the competent authorities of foreign states.
As notified on the official website of the President of Ukraine, these changes should be prepared within 3 months in cooperation with experts, businesses, and the Verkhovna Rada Committee on Finance, Taxation and Customs Policy.
You can learn more about the key changes in other 1210: Business Advisor publications.