On January 1 Ukraine will join the BEPS Action Plan to tackle tax evasion

Today, Minister of Finance Oleksandr Danyliuk has handed over an official letter on Ukraine’s participation in the BEPS Action Plan to Angel Gurria, the OECD General Secretary. This is the final step for Ukraine to officially become a full member of BEPS starting from January 1, 2017.

What’s it about?

Today, a lot of countries are confronted with significant difficulties in tax collection due to numerous discrepancies between national and international tax regulations. Business now has too many possibilities to manipulate tax rates, tax mode and tax status in different countries. That was the reason for the OECD to develop recommendations on the prevention of tax evasion – BEPS Action Plan (Base erosion and Profit Shifting).

The Plan includes 15 steps addressing aggressive tax planning. These steps refer to the improvement of rules for Funds Transfer Pricing, prevention of tax evasion using international contracts, taxation of affiliated foreign companies, information exchange etc.

What’s in it for Ukraine?

BEPS sets unified rules which help fight manipulation and create equal terms for all entities. Ukraine’s membership in BEPS is a positive sign for investors which will stimulate foreign trade and foster the economic growth of Ukraine.

For information:

Ukraine’s joining BEPS means that Ukraine is obliged to implement BEPS minimum standards including 4 steps:

- fight against tax manipulation using special tax regimes;
- prevention of manipulations in applying tax conventions;
- disclosure of information on aggressive tax planning;
- increase of the effectiveness of mechanisms for the settlement of disputes related to international treaties on the avoidance of double taxation.