Is it possible to submit the CFC Report without an annual asset declaration?
Is it possible to submit the Report on Controlled Foreign Companies without an annual declaration of property and income, if such a declaration is not required?
Paragraph 392.5 of the Tax Code sets forth the requirements for the preparation and submission of the Report on Controlled Foreign Companies (hereinafter referred to as the Report).
In particular, subpara. 392.5.2 of the TCU provides that controlling persons are obliged to submit 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 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 form of the Declaration on Property Status and Income (hereinafter referred to as the "Declaration") and the Instruction on Completion of the Tax Return on Property Status and Income (hereinafter referred to as the "Instruction") were approved by the Order of the Ministry of Finance No. 859 dated October 2, 2015.
According to para. 2 of Sec. II "Procedure for Preparation of the Declaration" of the Instruction, the annexes are an integral part of the Declaration and are not valid without the Declaration.
For individuals who are controllers of controlled foreign companies, the Declaration form provides for filling in a separate Annex KIK "Calculation of tax liabilities on personal income tax and military duty determined from a part of the profit of a controlled foreign company".
Annex KIK is filled in separately for each controlled foreign company. Tax liabilities for personal income tax and military duty payable on the profit of a controlled foreign company are calculated in accordance with the provisions of Article 392 of Section. I of the TCU and subpara. 170.13, 170.131 of the TCU (clause 9 of Section IV "Procedure for filling in the annexes to the declaration" of the Instruction).
Line 10.14 of the Declaration and the lines of the KIK Annex are mandatory, contain a numeric field or letters, so in the absence of a taxable object or tax, each of them is indicated as zero.
Therefore, the Report must be submitted together with the tax return, even if there are no obligations under the Declaration.
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