Arzinger Alert: THE STATE FISCAL SERVICE OF UKRAINE DENIES THE POSSIBILITY OF DEBT TO EQUITY SWAP FOR LEGAL ENTITIES
LEGAL ALERT - ARZINGER law firm,
Kyiv, Ukraine, Thu, April 07, 2016
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The State Fiscal Service of Ukraine ("SFS") published its Letter No. 3174/6/99-99-19-02-02-15 dated 15 February 2016, in which it stated that exchange of debt liabilities of a legal entity (in particular of a corporate profit tax payer) for equity participation , i.e. the so-called debt to equity swap, was impossible.
In its Letter the SFS concludes that the current legislation does not allow a founder who is also an LLC’s creditor to increase the LLC’s charter capital through discharging the accounts payable previously formed by the same LLC by contributing the property rights to the mentioned accounts payable to its charter capital.
For any further consultations please contact the Tax Practice of the Arzinger law office.
Kind regards and best wishes,
Partner, Head of Tax and International Tax Practice
Counsel of Tax and International Tax Practice