Submission of a copy of financial statements to the Report by controlled foreign companies

In what form (electronic or paper) are duly certified copies of the financial statements of the controlled foreign company confirming the amount of profit of the controlled foreign company for the reporting (tax) year submitted to the Report on Controlled Foreign Companies and how is the certification carried out?

According to subpara. ³⁹².5.2 of the TCU, controlling persons are obliged to submit the Report on Controlled Foreign Companies (hereinafter referred to as the Report) to the controlling authority simultaneously with the submission of the annual declaration of property status and income or corporate income tax return for the relevant calendar year by means of electronic communication in electronic form in compliance with the requirements of the Laws of Ukraine No. 851-IV "On Electronic Documents and Electronic Document Flow" (hereinafter - Law No. 851) and No. 2155-VIII "On Electronic Identification and Electronic Trust Services" (hereinafter - Law No. 2155) dated October 05, 2017.

The Report must be accompanied by duly certified copies of the financial statements of the controlled foreign company (hereinafter referred to as the CFC), which confirm the amount of the CFC's profit for the reporting (tax) year.

The Order of the Ministry of Finance No. 254 dated August 25, 2022 approved the form of the Report and the Procedure for filling out the Report, the abbreviated form of the Report and submission to the supervisory authority (hereinafter - the Procedure).

The Report consists of a heading, general information about the controlling person, information about the CFC and annexes to the Report (paragraph 1 of clause 8 of section I of the Procedure).

In column 35 of the section "Information on the annexes attached to the report and forming its integral part" of the Report, a mark is placed on the submission of a copy of the financial statements of the controlled foreign company, duly certified (submitted in any form) (clause 35 of Section II of the Procedure).

Given that the Report is submitted electronically, copies of financial statements that are an annex to the Report and an integral part of it are submitted electronically in any form in pdf format.

The provision of subpara. ³⁹².5.2 of the TCU requires taxpayers to take into account the standards of document execution defined by the national standard as a regulatory document in accordance with Articles 1, 23 of the Law of Ukraine No. 1315-VII "On Standardization" dated June 5, 2014.

The procedure for certifying copies of documents is determined by clause 5.26 of the National Standard of Ukraine State Unified Documentation System, Unified System of Organizational and Administrative Documentation "Requirements for Document Execution" DSTU 4163:2020, approved by Order of the State Consumer Standard of Ukraine No. 144 dated 01.07.2020, which entered into force on 01.09.2021.

Clause 5.26 of the National Standard "Requirements for Execution of Documents" (DSTU 4163:2020) stipulates that the mark on the certification of a copy of a document consists of the words "according to the original", the title of the position, the personal signature of the person certifying the copy, his/her name and surname, and the date of certification of the copy. In cases specified by law, copies of documents shall be certified with an imprint of the seal of a legal entity, a structural unit (record keeping service, human resources service, accounting department, etc.) of a legal entity or a seal "For copies".

Thus, the person who signs the financial statements shall put a mark on the certification of a copy of such document.

At the same time, Law No. 851 defines an electronic document as a document in which information is recorded in the form of electronic data, including mandatory document details, without which it cannot be the basis for its accounting and will not have legal force.

One of such details is an electronic signature, which is used to identify the author and/or signatory of an electronic document by other subjects of electronic document management. The imposition of an electronic signature equivalent to a handwritten signature in accordance with Law No. 2155 completes the procedure for creating an electronic document.

Thus, the controlling person is obliged to submit to the supervisory authority copies of the CFC's financial statements certified in accordance with the requirements of clause 5.26 of the National Standard "Requirements for Execution of Documents" (DSTU 4163:2020) together with the Report by means of electronic communication in electronic form in compliance with the requirements of Laws No. 851 and No. 2155, and such a document will have legal force and be considered duly certified, since the person who applies the electronic signature certifies the accuracy of the information contained in the electronic document, in particular, in the CFC's financial statements.

Please note that the current legislation does not provide for the translation into Ukrainian of financial statements prepared in a foreign language, as well as its apostillization and notarization.