On May 12 there was held the VIІI International Tax Forum organized by Yurydychna Praktyka publishing house, at which EUCON Legal Group has been a General Partner for eight consecutive years now.
Yaroslav Romanchuk, Managing Partner EUCON, attorney at law as an initiator was granted the right to deliver welcoming remarks. Mr. Romanchuk emphasized the stable relevance of tax issues and, as a moderator of an open discussion on the tax landscape of Ukraine and the world, introduced the present colleagues and outlined the topics of conversation: international trends in the roadmap of tax reform in Ukraine, international exchange of tax information, creation of Economic Security Bureau, tax amnesty prospects, tax on the withdrawn capital etc. In particular, during the discussion there was highlighted the efficiency of the business ombudsman institution in practical cases of business assistance and communication with tax authorities, the importance of tax amnesty and its consequences, the negative dynamics in reforming and creating new tax authorities.
An exclusive part of the Tax Forum was an open interview of the head of the State Tax Service of Ukraine Oleksiy Lyubchenko on the topic “Transformation of the tax policy of Ukraine”, hosted by Yaroslav Romanchuk.
Thus, during the interview they discussed the issues of confidence in the trust in the State Tax Service and the need to form a layer of competent professionals, the effectiveness of working with the register of individual tax advice, as well as creating a format for providing quick responses to taxpayers’ inquiries. Oleksiy Lyubchenko exclusively announced the creation of a tax-analytical map, one of the blocks of which will be dedicated to the Individual Tax Advice.
Mr. Lyubchenko commented on the peculiarities and outcomes of the Large Taxpayers Office’s work. Besides, to his opinion LTO has recently become a kind of the authority providing VIP service. In particular, the Head of the State Tax Service shared the results of 5 interregional departments working with Large Taxpayers. The above allowed for identification and analysis of features distribution of the Largest Taxpayers by industry. FYI: the 5 interregional departments are the Central – in Kiev, the Eastern – in the Dnieper, the Western – in Lviv, the Southern – in Odessa and the Northern – in Kharkov.
As for the latest statistics of the State Tax Service of Ukraine, Oleksiy Lyubchenko noted that according to the results of the last Income Tax Declaration so far there has been declared twice as much than in the previous period. As for the representatives of various categories of business, the Head of the State Tax Service announced data showing an increase in the number of Sole Proprietors in 2020 by 26,000, the transfer of the main burden on filling the state budget to medium-sized enterprises, and the number of billionaires over the last year reduced to one-third of its previous value, instead, the number of millionaires increased. One of the factors brought to these results was the demand to report the incomes obtained abroad, however, it, as Yaroslav Romanchuk stressed, has exacerbated the problem of double taxation.
The Head of the State Tax Service also voiced a priority area for effective administration of taxes and fees payable by individuals, that is the provision of quality and convenient services to VIP-citizens, which include wealthy people with incomes over UAH 100 million, as well as public figures and celebrities.
In addition, the participants discussed the abolition of plans for tax workers, the work of an integrated assessment system of territorial divisions of the State Tax Service and an important topic of legislation in this area of Transfer Pricing. It should be mentioned, inter alia, that there some difficulties within Transfer Pricing caused by insufficient international exchange of tax information. However, the present professionals admitted progress made in launching the CRS and the peculiarities of the analytical work during the quarantine period, as well as the moratorium on inspections.
Regarding the establishment of communication between business and taxpayers, Yaroslav Romanchuk noted: “The simple recipe for creating a favourable climate is: equal rules of the game for everyone, stable legislation and the ability to protect their rights in court.” The interviewees voiced the important problem of the shortage of qualified and interested staff, agreeing that for the proper conditions for young professionals training it is essential to change the philosophy of work and to join efforts of the State Tax Service and business. “The auditor, the tax specialist today is the virtuous person who knows technologies“, – Oleksiy Lyubchenko noted.
Larysa Vrublevska, auditor, Partner, Head of Transfer Pricing Practice of EUCON became the moderator of the expert discussion on “Transfer Pricing”. In the discussion as speakers there took part Ihor Olender, the Judge of the Administrative Court of Cassation of the Supreme Court and Kateryna Ryzhenkova, Head of the Transfer Pricing Department of the Tax Audit Department of the State Tax Service of Ukraine.
In the course of discussion of the latest case law in the field of Transfer Pricing Larysa Vrublevska noted that the long-awaited disputes have finally emerged, as a result of which in November 2020 the Supreme Court summarized the practice in the field of Transfer Pricing.
The speakers also discussed the main changes in the Transfer Pricing for 2020 and 2021, including the adoption and operation of Laws 466 and 1117, the approach of the supervisory authority to analyse documentation with Transfer Pricing, Transfer Pricing outside the Article 39 TCU (tax risks and management), the specifics of application of the criterion of business purpose and good faith and business prudence of the taxpayer in economic relations in 2021.
Regarding the aspect of applying the business objective criterion, Larysa Vrublevska reminded that from 2021 it will apply to controlled transactions of taxpayers, and from 2022 it will additionally apply to transactions with non-residents from the lists (including uncontrolled transactions). The Law 466 amended the Art. 140 paragraph 145/15 which provided for the extension of the criterion of business purpose to all transactions with non-residents, and this paragraph was repealed by Law 1117 in December, so in fact it was in force from May 23 to December 31, 2020, which gives the tax authority the right to apply for this period adjustment of the object of taxation in the event that the transaction with non-residents was not for business purposes.
