Deadlines for submitting a written audit report confirming the financial statements of a CFC

Within what period of time is the controlling person obliged to provide a written audit report confirming the financial statements of the CFC at the request of the supervisory authority?

The requirements for the preparation and submission of the Report on Controlled Foreign Companies are set forth in paragraph ³⁹².5 of the TCU.

In particular, subpara. ³⁹².5.2 of the TCU provides that controlling persons are obliged to submit the Report on Controlled Foreign Companies to the controlling authority simultaneously with the submission of the annual declaration of property status and income for the relevant calendar year by means of electronic communication in electronic form in compliance with the requirements of the laws of Ukraine dated 22.05.2003 No. 851-IV "On Electronic Documents and Electronic Document Management" and No. 2155-VIII "On Electronic Identification and Electronic Trust Services" dated 05.10.2017.

The Report on Controlled Foreign Companies must be accompanied by 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.

Pursuant to the second paragraph of subpara. ³⁹².3.1 of the TCU, if the legislation of the foreign jurisdiction of the tax residence of the controlled foreign company does not require the preparation of financial statements, the controlling person must ensure that the financial statements of the controlled foreign company are prepared in accordance with international financial reporting standards.

If the supervisory authority has doubts about the reliability of the financial statements of a controlled foreign company, the supervisory authority has the right to request a written opinion of the audit firm confirming the financial statements of the controlled foreign company not earlier than 15 months after the end of the reporting period for which the adjusted profit of the controlled foreign company is calculated (paragraph 3 of subpara. ³⁹².3.1 of the Tax Code).

Such a written opinion must be provided by an audit company authorized to audit financial statements in the relevant foreign jurisdiction and may not contain a negative opinion or refusal to provide an opinion (subpara. 4 of subpara. ³⁹².3.1 of the TCU).

Pursuant to subpara. ³⁹².6.4.3 of the TCU, during the audit, the controlling person is obliged to ensure that copies of primary documents on some or all transactions of the controlled foreign company are provided to the controlling body upon its request.

The documents must be submitted within one month from the date of receipt of the relevant request by the taxpayer in certified copies. In case of submission of documents in English, translation into Ukrainian is not required.

If it is necessary to obtain additional documents confirming the financial and business operations of the controlled foreign company during the audit, they shall be provided by the taxpayer within 30 calendar days from the date of receipt of the additional request of the controlling authority.

If there are doubts as to the accuracy or completeness of the submitted documents or failure to provide a complete set of documents, the controlling authority may require the controlling person to provide an audit opinion on the financial statements of the controlled foreign company, which may not contain a refusal to provide an opinion or an adverse opinion.

If the controlling person submits an audit report of an audit firm authorized to audit financial statements in the relevant foreign jurisdiction confirming the financial results of the controlled foreign company, such audit report is a sufficient document on the basis of which the profit of the controlled foreign company before taxation is determined and the adjusted profit of the controlled foreign company is calculated. The submission of such an audit report by the controlling person does not require the submission of additional documents to confirm the profit of the controlled foreign company before taxation.

Taking into account the above, at the request of the controlling authority, an individual controlling person is obliged to provide a written audit opinion confirming the financial statements of a controlled foreign company within one month, i.e. no later than 30 calendar days, from the date of receipt by the taxpayer of the request of the controlling authority.