Compliance with the Procedure for Monitoring Controlled Transactions

The tax authorities draw attention to the clarification of the State Tax Service of Ukraine on compliance with the requirements of Section III "Analysis of Reports on Controlled Transactions and Notifications on Participation in an International Group of Companies" of the Procedure for Monitoring Controlled Transactions, approved by Order of the Ministry of Finance of Ukraine No. 706 dated 14.08.2015, in terms of control over the submission of notifications and the accuracy of the information provided in them.

Therefore, in order to bring the Order of the Ministry of Finance No. 839 dated December 31, 2020 "On Approval of the Form and Procedure for Preparing the Notification on Participation in an International Group of Companies" (hereinafter - Order No. 839) in accordance with the provisions of the Law of Ukraine dated March 20, 2023 No. 2970-IX "On Amendments to the Tax Code of Ukraine regarding the Implementation of the International Standard for the Automatic Exchange of Information on Financial Accounts" by the Order of the Ministry of Finance dated February 09, 2024 No. 58 "On Amendments to the Order of the Ministry of Finance of Ukraine dated December 31, 2020 No. 839" (hereinafter - Order No. 58), as amended and supplemented by the Order of the Ministry of Finance No. 101 dated March 01, 2024 "On Amendments to the Order of the Ministry of Finance of Ukraine No. 58 dated February 09, 2024" (hereinafter - Order No. 101):

► Amendments to the form of the Notification on Participation in an International Group of Companies (hereinafter referred to as "IHC") approved by Order No. 839, in particular, it was set out in a new version;

► Amendments to the Procedure for Completing the Notification of Participation in an International Group of Companies (hereinafter - the Procedure), approved by Order No. 839, were approved.

On March 19, 2024, Orders No. 58 (page 1702) and No. 101 (page 1704) were published in the Official Gazette of Ukraine No. 26 and entered into force.

Order No. 58 was issued in accordance with subparagraph 39.4.2.2 of subparagraph 39.4.2 of the Tax Code,

Law of Ukraine dated March 20, 2023 No. 2970-IX "On Amendments to the Tax Code of Ukraine and Other Legislative Acts of Ukraine on Implementation of the International Standard for Automatic Exchange of Information on Financial Accounts" and provides for

► supplementing and aligning with the provisions of Step 13 of the VER8 Action Plan on three-tier transfer pricing documentation and implementation of the international standard for automatic exchange of information in the context of the IHC countries the concepts of "QCAA Agreement", "international group of companies", "parent company of an international group of companies", "member of an international group of companies"; "authorized participant"

► clarification of the category of taxpayers who are required to submit a Notice of Participation in an IGC (in particular, those taxpayers who are members of the relevant IGC and conducted controlled transactions in the reporting year are required to submit it);

► clarification of the list of information to be contained in the Notice of Participation in an IGC in the context of each jurisdiction (state, territory) in which a participant of the relevant IGC is registered or in which the IGC operates, and in respect of each participant of such IGC;

► expanding the possibility of choosing the status of submission of the Report by IHC country (in particular, the status of an authorized IHC participant was clarified by distinguishing residents of Ukraine (SVS802) and mandatory filling in of information and registration data about the relevant IHC participant in this case (section II "Information about the member of the international group of companies, authorized by the parent company to submit a country-by-country report"), the possibility for an IGC to record the relevant status (SVS805) in case of failure to submit a country-by-country report (since the total consolidated income of an IGC for the financial year preceding the reporting year is less than EUR 750 million).

The form of the Notification of Participation in IHC has been amended, in particular:

► the words "state (territory)" in all cases and numbers have been replaced by the words "jurisdiction (states, territories)" in the appropriate cases and numbers;

► a new column 6.1 was added with sub-columns - "Date of receipt of information on the participant's authorization" and "Date of receipt of information on the loss of the participant's status";

► Section III "Information on countries, in accordance with the legislation of which the IHC does not submit the Report by IHC country" was deleted.

Amendments to the Procedure:

In Section I of the Procedure, the wording was changed:

- Clause 2 - "2. For the purposes of this Procedure, the terms "QSAA Agreement", "IHC", "IHC parent company", "international agreements", "authorized participant", "IHC participant" shall have the meanings defined by the Tax Code;

- clause 8:

the third paragraph of clause 8 - "The columns that indicate a limited list of fixed codes given in this Procedure and are mandatory for filling in are marked in the form of the Notice of participation in the IGC as [K]";

- paragraph 12 - "12. Taxpayers who are members of the respective IGC and conducted controlled transactions in the reporting year are obliged to submit

Notification on participation in an IGC by October 01 of the year following the reporting year. If the last day of the deadline for submission of the Notification on participation in the IGC falls on a weekend or a holiday, the last day of the deadline is the business (banking) day following the weekend or holiday."

In Section II of the Procedure:

the wording was changed:

- clause 6:

is supplemented with a new paragraph - "In column 6.1, the date of receipt of information on its appointment as an authorized IHC participant or the date of loss of such status shall be indicated. The field shall be filled in if more than one IGC member is a taxpayer resident of Ukraine and there are one or more circumstances specified in paragraphs five to seven of subparagraph 39.4.10 of paragraph 39.4 of Article 39 of Section I of the TCU, the IGC may appoint one of such members as an authorized representative to submit the Report by IGC country. The authorized participant of the IGC shall notify the central executive body that implements the state tax policy of such appointment by submitting a notification of participation in the IGC, as defined in sub-clause 39.4.2 of clause 39.4 of article 39 of section I of the TCU."

- clause 8:

in the first paragraph of clause 8, the figures "31-03-2020" are replaced by the figures "31-03-2021";

clause 9 - "9. Column 10 indicates the code corresponding to the role of the taxpayer in the submission of the Report by IGC countries. Depending on the circumstances determined by subparagraph 39.4.10 of paragraph 39.4 of Article 39 of Section I of the TCU, one of the following codes shall be indicated:

SVS701 - the taxpayer is the parent company of an IHC. In this case, the code SVS801 or SVS802 or SVS805 should be indicated in column 15;

SVS702 - a taxpayer authorized by the parent company of an MHC to submit the Report by MHC country to the supervisory authority. In this case, the code SVS802 should be indicated in column 15;

СВС709 - the taxpayer is an IGC member that is not authorized by the IGC parent company to submit the Report by IGC country to the supervisory authority in accordance with the requirements of the legislation of Ukraine or the jurisdiction of tax residence of the IGC parent company. In this case, the code SVS801 or SVS802 or SVS809 should be indicated in column 15."

- clause 10:

in the third paragraph, the words "or equal to the equivalent" shall be replaced with the words "for the equivalent";

in the fourth paragraph, after the words "preceding the reporting period", add the words "equal to or";

- paragraph 17 - "17. Column 15 shall contain information on the status of submission of the Report by an international group of companies by IHC country. For this purpose, one of the possible values is used, namely:

CBC801 - The report is submitted by the ultimate parent company;

СВС802 - Report by IGC country is submitted by an authorized IGC participant, including a resident of Ukraine. In this case, section II of the Report on participation in the IYC shall contain information about the authorized IYC participant;

СВС805 - Report by IGC country is not submitted, as the criteria for its submission in accordance with the Tax Code are not met (total consolidated income of the IGC for the financial year preceding the reporting year is less than EUR 750 million);

СВС809 - The report by IHC country is submitted by an IHC participant in Ukraine, since one of the conditions is met in accordance with paragraphs five to seven of subparagraph 39.4.10 of paragraph 39.4 of Article 39 of Section I of the TCU."

- paragraph 19 - "19. Column 17.1 indicates the tax identification (registration) number (code) (TIN or Tax Identification Number, or TIN) used by the tax authorities of the jurisdiction (state, territory) of tax residence of the parent company of an IHC. If the parent company has a TIN used by the tax authorities in the jurisdiction (state, territory) of its tax residence, such a number must be provided. If the parent company does not have a TIN, the value "NOTIN" shall be indicated in column 17.1. Column 17.2 shall indicate the code of the jurisdiction (state, territory) that issued the TIN. For the purposes of filling in this column, the two-digit alpha-2 letter code in accordance with the List of World Country Codes shall be used.

If the code "UA" is indicated in column 13.2, the value of column 17.1 must correspond to the data of the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations, and column 17.2 must contain the code "UA";

- clause 20 - "20. Column 18.1 contains information on any other identification (registration) numbers (codes) (IN) of the parent company. For example, a company registration number (BRN), company registration number or Global Entity Identification Number (EIN).

Column 18.2 shall contain information about the type of identification (registration) number (code), information about which is provided in column 18.1 (for example, EIN). Column 18.3 indicates the country code corresponding to the code of the jurisdiction (state, territory) that issued the TIN. For the purposes of filling in this column, the two-digit alpha-2 letter code in accordance with the List of World Country Codes is used. If the jurisdiction (state, territory) in which the number was issued is unknown, this column shall not be filled in.

Columns 18.1 - 18.3 may be repeated depending on the number of other identification numbers";

- clause 21:

the words "address of the location" are replaced by the words "address of the location";

- clause 26:

after the word and figures "code "SVS802", the word and figures "or "SVS809" are added;

- clause 30:

- the first paragraph of Clause 30 shall read as follows. Column 26.1 shall indicate the tax identification (registration) number (code) (TIN or Tax Identification Number, or TIN) used by the tax authorities of the jurisdiction (state, territory) of tax residence of the participant of the IHC. If the participant has a TIN used by the tax authorities in the jurisdiction (state, territory) of its tax residence, such number shall be provided on a mandatory basis. If the participant does not have a TIN, the value "NOTIN" shall be indicated in column 26.1. Column 26.2 indicates the code of the jurisdiction (state, territory) that issued the TIN. For the purposes of filling in this column, the two-digit alpha-2 letter code in accordance with the List of World Country Codes shall be used.

- If the code "UA" is indicated in column 23.2, the value in column 26.1 must correspond to the data of the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations, and the code "UA" must be indicated in column 26.2;

- clause 31:

paragraphs one and two of clause 31 - "31. Column 27.1 shall contain information on any other identification (registration) numbers (codes), such as the company registration number (BRN), company registration number or Global Entity Identification Number (EIN).

Column 27.2 shall contain information about the type of identification (registration) number (code), information about which is provided in column 27.1 (for example, EIN). Column 27.3 indicates the country code that corresponds to the code of the jurisdiction (state, territory) that issued the TIN. For the purposes of filling in this column, the two-digit alpha-2 letter code in accordance with the List of World Country Codes is used. If the jurisdiction (state, territory) in which the number was issued is unknown, this column shall not be filled in."

In view of the foregoing, the Notification on participation in the IYC must be drawn up and submitted to the supervisory authority in the updated form (identifier J1800103) and in accordance with the Procedure approved by Order No. 839 as amended by Order No. 58.

The Notifications on participation in the IGC for the financial year 2022 (which ends on January 1 - December 31, 2022) submitted by taxpayers before the entry into force of Order No. 58 and the introduction of the possibility of submitting the Notification on participation in the IGC in the updated form are considered valid.

It should be noted that by the Order of the State Tax Service No. 979 dated 23.11.2023, the subsystem "Automatic Exchange of Tax Information" was put into permanent operation as a component of the information and communication system "International Automatic Exchange of Information" (hereinafter - the AOI Subsystem).

Link to the AOPI Subsystem: http:aopi.sts.local

The functionality of the Subsystem provides the ability to automatically accept, process, accumulate, use and send information according to CRS/CbC standards. In particular, in the "Notification Log" mode of the AOPI Subsystem, Notifications on participation in the IYC and information on the processing of these documents are available for viewing. In addition, in the "Analytical Information" section, it is possible to generate and upload consolidated information from received IYC Notifications to Microsoft Excel.

To obtain access rights to the AOPI Subsystem (System ID 450)

in accordance with clause 6.5 of section 6 of the Procedure for Access to Information in

information, electronic communication and information and communication systems of the State Tax Service of Ukraine, approved by the Order of the State Tax Service of Ukraine dated 15.05.2020 No. 216, the role "-450006 Viewing of Notifications on participation in the IYC" is used, which allows viewing notifications on participation in the IYC and electronic messages sent to taxpayers; protocols for verifying messages; viewing relevant reference books and analytical reports.