Notification of participation in an international group of companies submitted late: what is the liability?

What penalties are imposed for failure to submit, late submission of the Notification on participation in an international group of companies or provision of inaccurate information therein?

In accordance with the second and third paragraphs of subpara. 39.4.2 of the TCU, taxpayers who are members of the relevant international group of companies and who carried out controlled transactions in the reporting year are required to submit a Notice of Participation in an International Group of Companies (hereinafter - the Notice) by October 1 of the year following the reporting year.

In particular, the Notification shall be submitted to the central executive body implementing the state tax policy 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 Management" dated May 22, 2003 and No. 2155-VIII "On Electronic Identification and Electronic Trust Services" dated October 5, 2017.

The form and procedure for drawing up the Notification are approved by the Order of the Ministry of Finance No. 839 dated December 31, 2020.

The liability of taxpayers for failure to submit (late submission) of the Notification or provision of inaccurate information in the Notification is provided for in Art. 120 of the TCU.

Clause 120.3 of the TCU stipulates that failure to submit a taxpayer, in particular, a Notification in accordance with the requirements of Article 39 of the TCU, entails the imposition of a fine (fines) in the amount of 50 times the minimum subsistence level for an able-bodied person established by law as of January 1 of the tax (reporting) year, in case of failure to submit the Notification.

Payment of such financial penalties (fines) does not relieve the taxpayer from the obligation to submit, in particular, the Notification.

Failure of the taxpayer to submit, in particular, the Notification after the expiration of 30 calendar days following the last day of the deadline for payment of the penalty (penalties) provided for in clause 120.3 of the TCU shall result in a fine in the amount of 5 times the subsistence minimum 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 Notification, but not more than 300 times the subsistence minimum for an able-bodied person established by law as of January 1 of the tax (reporting) year.

Paragraph 120.6 of the Tax Code stipulates that late submission by a taxpayer, in particular, of a Notification, entails the imposition of a fine (fines) 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 late submission of the Notification, but not more than 100 subsistence minimums for an able-bodied person established by law as of January 1 of the tax (reporting) year.

Pursuant to clause 120.5 of the TCU, providing false information, in particular, in the Notification, entails the imposition of a fine (fines) in the amount of 50 times the subsistence minimum for an able-bodied person established by law as of January 1 of the tax (reporting) year, in case of providing false information in the Notification.

Payment of such penalties does not relieve the taxpayer from the obligation to submit, in particular, a clarifying notification.

The penalty provided for in clause 120.5 of the TCU does not apply if the taxpayer submitted, in particular, a Notification with errors that did not affect the correct identification of the state or territory where one or more members of the international group of companies are resident, and/or the correct identification of each member of the relevant international group of companies, and/or the correct identification of the jurisdiction of the report submission by country of the international group of companies, and such a taxpayer corrected the errors by submitting, in particular, a clarifying Notification independently.

At the same time, clause 11 of subsection 10 of section XX "Transitional Provisions" of the TCU stipulates that penalties (financial sanctions) based on the results of inspections carried out by the controlling authorities are applied in the amounts provided for by the law in force on the day of making decisions on the application of such penalties (financial sanctions) (taking into account the provisions of clause 7 of subsection 10 of section XX "Transitional Provisions" of the TCU).