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OECD Global Forum has completed the First Stage of Verification of Ukraine's Compliance with the Standard for Exchange of Information on Request

On June 24, 2021, the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes has published the report on the results of the first phase of the review of Ukraine. It contains observations and recommendations, which should be taken into account to obtain a satisfactory assessment (rating) of compliance with the exchange of information on request (EOIR) standard.

Ukraine is obliged to ensure the exchange of information between Ukrainian tax officials and their colleagues from other countries in compliance with international standards. One of them is the EOIR standard, which stipulates unified conditions for requesting certain information and its exchange based on tax conventions. This standard is mandatory for more than 160 participants of the Global Forum.

According to the recommendations, Ukraine needs to amend the legislation and ensure:

  • collection of information on the ownership structure and ultimate beneficial owners (UBOs) of foreign companies that have permanent representative offices, or place of effective management, or headquarters in Ukraine;
  • collecting information on partners and UBOs of foreign partnerships that operate or receive income subject to taxation in Ukraine;
  • clarifying the rules for determining the UBOs of legal entities and legal formations, taking into account their peculiarities (in particular, the specifics of determining the UBOs for foreign partnerships should be clarified)
  • availability of information on trusts, which are managed or administered by residents of Ukraine;
  • storage of primary accounting documents and financial statements by legal entities for not less than 5 years after the end of the period or liquidation of the company.

Ukraine is obliged to demonstrate progress in implementation of the recommendations of the first stage of the audit before the completion of the second stage of the audit and assignment of the rating. The second stage of verification is tentatively scheduled for the first half of 2022.

The Ministry of Finance will develop amendments to Ukraine's legislation necessary to bring it into compliance with the Global Forum standard and inform businesses about these changes. The new rules will primarily affect legal entities with foreign trade operations and non-residents.

In addition

Since the fall of 2019, the Global Forum initiated a partner verification of Ukraine on compliance with the EOIR standard. The verification takes place in two stages. The first stage analyzes the compliance of the state's legislation with the standard. At the second stage, representatives of the partner states visit the country of the audited state and analyze whether tax authorities comply with the requirements of the standard in practice.

According to the results of the second stage of the audit, the state is given a score (rating), which determines whether the state is transparent in taxation issues and cooperation with partner countries. The scores "Compliant" and "Largely Compliant" indicate that the state is considered transparent.