Report on controlled foreign companies submitted late: what is the liability?

What liability applies for failure to submit (late submission) of the Report on Controlled Foreign Companies (hereinafter referred to as the Report) or failure to reflect data and/or information in the Report, including during the period of martial law?

Pursuant to paragraphs one through six of clause 120.7 of the Tax Code, failure of a controlling person to submit the Report on Controlled Foreign Companies (hereinafter referred to as the Report) shall result in a fine of 100 times the minimum subsistence level for an able-bodied person established by law as of January 1 of the tax (reporting) year.

Late submission of the Report by a controlling person shall be punishable by a fine in the amount of one subsistence minimum for an able-bodied person established by law as of January 1 of the tax (reporting) year for each calendar day of non-submission, but not more than 50 subsistence minimums for an able-bodied person established by law as of January 1 of the tax (reporting) year.

Failure of the controlling person to provide information in the Report on the existing controlled foreign companies and/or failure to provide information specified in subparagraphs "d" - "h" of subpara. 2.5.3 of clause 39 of note. 2.5 of Article 39 para. 2 of the TCU, with respect to existing controlled foreign companies, entails the imposition of a fine in the amount of 3 percent of the amount of income of controlled foreign companies or 25 percent of the adjusted profit of the controlled foreign company for the relevant year not reflected in the Report, whichever is higher, but not more than 1000 times the minimum subsistence level for an able-bodied person established by law as of January 1 of the tax (reporting) year, for each fact of failure to reflect the controlled foreign company and/or for all unreported amounts.

Payment of such financial penalties (fines) does not exempt the taxpayer from the obligation to submit the Report and supporting documents provided for in Article 39, subpara. 2 of the TCU (paragraph eleven of clause 120.7 of the TCU).

Paragraphs 12 - 13 of clause 120.7 of the TCU stipulate that failure to submit the Report within 30 calendar days following the last day of the deadline for payment of financial sanctions (fines) provided for in clause 120.7 of art. 120 of the TCU entails a fine in the amount of five times the minimum subsistence level for an able-bodied person established by law as of January 1 of the tax (reporting) year for each calendar day of failure to submit the Report, but not more than 300 times the minimum subsistence level for an able-bodied person established by law as of January 1 of the tax (reporting) year.

At the same time, the Law of Ukraine dated May 09, 2024 No. 3706-IX "On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Peculiarities of Export of Certain Types of Goods during the Period of Martial Law" amended Subsection 10 of Section XX "Transitional Provisions" of the TCU, which was supplemented by a new clause 72.

Thus, in accordance with clause 72 of subsection 10 of section. XX "Transitional Provisions" of the TCU stipulates that temporarily, from January 1, 2022 and during the period of martial law in Ukraine, introduced by the Decree of the President of Ukraine "On the Introduction of Martial Law in Ukraine" dated February 24, 2022 No. 64/2022, approved by the Law of Ukraine "On Approval of the Decree of the President of Ukraine "On the Introduction of Martial Law in Ukraine" dated February 24, 2022 No. 2102-IX, and six months after the month in which martial law is terminated or canceled, taxpayers are not subject to penalties for violations provided for in paragraphs, in particular, the first to sixth of clause 120.7 OF THE TCU.