Actual changes in tax legislation as of May 2023: an overview for business

18/ 05/ 2023

On the May 18, 2023, at the nearest meeting of the EBA Odesa Financial and Tax Committee, we discussed the current changes in tax legislation as of May 2023. Thus, among the main theses of the meeting, the following can be highlighted: After recent changes in the Tax Code of Ukraine (TCU), the tax service has finally confirmed the possibility of using List No. 309 from the Ministry of Reintegration for tax purposes, in particular, for the application of tax benefits. In addition, with the above-mentioned changes, the tax service gained the right to apply a fine for failure to provide answers/documents to requests - in the amount of 1 minimum wage on January 1 of the corresponding year. Meanwhile, the TCU still has a rule that allows not to respond to requests made in violation of the requirements - in the decision of the Supreme Court in the case of the Southern Railway, the Court revealed signs that indicate the non-compliance of a non-resident with the criteria of a beneficial owner for the interest received, which leads to the application in Ukraine repatriation tax at the rate of 15% In turn, in the decision of the court in the case of the Zeelandia company, the issue of the application of MLI to payments in favor of a non-resident was considered. In this particular case, the tax authorities misapplied the MLI (as it does not apply to the Convention with the Netherlands) and therefore lost the case. Meanwhile, this case itself shows that the tax service is already actively trying to justify additional accruals with the help of MLI, so our expert recommend recalling the procedure for applying this Convention - in the court decision in the Ukroliya case, the court came to the conclusion about the need to apply an increasing 30% adjustment to interest for loan accrued in favor of a low-tax non-resident. We sincerely thank Vitaly Smerdov, the head of the Financial and Tax Committee of the Association in Odesa, a partner in the tax practice of Crowe Mikhailenko, for the expertise and usefull review for the business!

On the May 18, 2023, at the nearest meeting of the EBA Odesa Financial and Tax Committee, we discussed the current changes in tax legislation as of May 2023.

Thus, among the main theses of the meeting, the following can be highlighted:

After recent changes in the Tax Code of Ukraine (TCU), the tax service has finally confirmed the possibility of using List No. 309 from the Ministry of Reintegration for tax purposes, in particular, for the application of tax benefits. In addition, with the above-mentioned changes, the tax service gained the right to apply a fine for failure to provide answers/documents to requests – in the amount of 1 minimum wage on January 1 of the corresponding year.
Meanwhile, the TCU still has a rule that allows not to respond to requests made in violation of the requirements – in the decision of the Supreme Court in the case of the Southern Railway, the Court revealed signs that indicate the non-compliance of a non-resident with the criteria of a beneficial owner for the interest received, which leads to the application in Ukraine repatriation tax at the rate of 15%
In turn, in the decision of the court in the case of the Zeelandia company, the issue of the application of MLI to payments in favor of a non-resident was considered. In this particular case, the tax authorities misapplied the MLI (as it does not apply to the Convention with the Netherlands) and therefore lost the case. Meanwhile, this case itself shows that the tax service is already actively trying to justify additional accruals with the help of MLI, so our expert recommend recalling the procedure for applying this Convention – in the court decision in the Ukroliya case, the court came to the conclusion about the need to apply an increasing 30% adjustment to interest for loan accrued in favor of a “low-tax” non-resident.

We sincerely thank Vitaly Smerdov, the head of the Financial and Tax Committee of the Association in Odesa, a partner in the tax practice of Crowe Mikhailenko, for the expertise and usefull review for the business!