CbC reports required following signing of CbC MCAA

On 3 November 2022, Ukraine joined the OECD Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbC MCAA). In 2020, Ukraine enacted a law adopting the three-tier transfer pricing reporting requirements, which are aligned with recommendations under action 13 of the OECD/G20 BEPS project. Under these requirements, in addition to a local file, certain Ukrainian companies now may be required to prepare a master file and a country-by-country (CbC) report. For the master file, 2021 was the first reporting period. However, CbC reports were not required until Ukraine joined the CbC MCAA. Now that Ukraine has joined the CbC MCAA, CbC reports are required in Ukraine and the Ukrainian tax authorities may gain access to CbC reports filed in other countries.

Who will need to file a CbC report in Ukraine?

Only a limited number of companies will need to file a CbC report in Ukraine. Such obligation arises for Ukrainian entities belonging to a multinational enterprise (MNE) group with consolidated annual revenue of at least EUR 750 million. If a CbC report has been filed by such MNE group in another jurisdiction, there is no secondary filing obligation in Ukraine, although there are exceptions. For instance, if a CbC report was filed in a jurisdiction that does not have a competent authority agreement in place with Ukraine requiring the automatic exchange of CbC reports or if there is a systematic failure in obtaining CbC reports from certain jurisdictions, then the CbC report must be filed in Ukraine. The list of such jurisdictions (which is expected to be minimal) will be published by the State Tax Service.

First reporting year for CbC reports

The Ukrainian tax law is unclear in regard to the first reporting period for CbC reports, but generally appears to be for financial years ending in 2022. An official clarification on this matter is expected soon.

Deadline for filing the CbC reports

A CbC report must be filed within 12 months of the MNE parent entity’s financial year end. For example, if the financial year of an MNE parent entity ends on 31 December 2022, the CbC report must be filed by 31 December 2023.

Filing form and procedure

The CbC report form follows the OECD template and discloses information on a CbC basis on revenue earned from related and unrelated parties, income tax accrued and paid, capital, retained earnings, headcount, tangible assets, and functional profiles of MNE group entities. The CbC report must be filed in electronic form.

A company filed a CbC Notification: What’s next?

For the vast majority of companies that file CbC Notifications in Ukraine, there will be no further obligations with respect to CbC reporting in Ukraine. The State Tax Service will automatically receive CbC reports from the tax authorities of countries indicated in the CbC Notifications. As discussed earlier, however, there may be cases where a Ukrainian company will be required to file a CbC report in Ukraine (e.g., CbC reports filed in a jurisdiction not a party to the CbC MCAA). It is advisable to monitor further developments in the upcoming months.

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