Ukraine has implemented Country-by-Country Reporting (CbCR) regulations in line with the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13, aimed at promoting tax transparency and combating tax avoidance by multinational enterprises (MNEs). Ukrainian regulations require large MNE groups to report financial and tax-related data to ensure fair tax practices across jurisdictions. This guide provides essential information for Chief Financial Officers (CFOs) and financial professionals of MNEs operating in or through Ukraine, detailing the CbCR requirements, reporting obligations, penalties for non-compliance, and available resources.

Applicability of CbCR in Ukraine

Criteria for Reporting:

• CbCR obligations apply to multinational enterprise (MNE) groups that meet the following criteria:
  • The MNE group’s consolidated revenues must be approximately 33.8 billion Ukrainian hryvnia in the preceding fiscal year.
  • The ultimate parent entity (UPE) of the group must be a tax resident in Ukraine.
  • In certain circumstances, a Ukrainian constituent entity of an MNE group may also be required to file the CbC report if:
    • The UPE is not a tax resident in a jurisdiction that has CbCR obligations,
    • The UPE’s jurisdiction does not have an agreement for the automatic exchange of CbC reports with Ukraine, or
    • There is a failure in the automatic exchange of CbC reports between Ukraine and the parent entity’s jurisdiction.

Relevant Legislation:

• The CbCR requirements in Ukraine are governed by Article 39.4.10 of the Tax Code of Ukraine, which was updated to reflect the OECD’s BEPS Action 13 standards.
• Additionally, the Ukrainian tax authorities implement the reporting rules and oversee compliance through regulations issued by the Ministry of Finance of Ukraine.

Reporting Requirements

Information to be Reported:

• MNE groups are required to submit a CbC report that contains financial and tax-related information on all constituent entities within the group, broken down by jurisdiction. Key data includes:
  • Total revenue (from related and unrelated parties),
  • Profit or loss before income tax,
  • Income tax paid and accrued,
  • Capital and retained earnings,
  • Number of employees,
  • Tangible assets other than cash and cash equivalents.
• The report must also include a list of all constituent entities within the MNE group, their jurisdiction of tax residence, and a description of their main business activities.

Form and Submission:

• The CbC report must be submitted in an electronic format, following the OECD XML schema, which ensures compliance with international standards.
• Reports are filed through the Ukrainian tax authorities’ electronic reporting system. More details on submission requirements can be found on the website of the State Tax Service of Ukraine: State Tax Service of Ukraine – CbCR.

Filing Deadlines

• The CbC report must be filed within 12 months after the last day of the fiscal year of the MNE group. For example, if the fiscal year ends on 31 December 2023, the CbC report is due by 31 December 2024.
• Ukrainian constituent entities of an MNE group must also notify the tax authorities of the identity and tax residence of the reporting entity (whether the UPE or a surrogate parent entity) by the end of the reporting fiscal year.

Penalties for Non-Compliance

Penalties:

• Ukraine imposes penalties for failure to comply with CbCR obligations, including:
  • A fine of UAH 1,200,000 (approximately €30,000) for failure to submit the CbC report by the deadline.
  • Additional penalties of UAH 70,000 to UAH 150,000 may be imposed for failure to notify the tax authorities about the reporting entity.
  • Fines may also be imposed for submitting incomplete or inaccurate information in the CbC report.

Defences:

• MNEs may appeal against penalties if they can provide evidence that the failure to comply was due to reasonable cause, such as technical difficulties or extraordinary circumstances. However, businesses are expected to take necessary measures to ensure timely and accurate filing of their CbC reports.

Confidentiality and Use of Information

Data Protection:

• CbC reports filed in Ukraine are considered confidential and are used by tax authorities solely for the purpose of risk assessment and monitoring cross-border tax avoidance strategies.
• Ukraine participates in international agreements for the automatic exchange of CbC reports with other jurisdictions. Reports are shared only with countries that meet the OECD’s confidentiality and data protection standards, ensuring that sensitive business information is safeguarded.