President of Ukraine has signed the Law No. 466-IX “On Amendments to the Tax Code of Ukraine to Improve Tax Administration, Eliminate Technical and Logical Discrepancies in Tax Legislation” (the “Law”).

The Law entered into force on 23 May 2020, however, many of its key provisions will come into effect later.

The Law significantly changes the current approach to taxation, in a number of instances being a total gamechanger for businesses and individuals. Its main purposes are de-offshorisation, ensuring tax transparency, and a large-scale implementation of the BEPS Action Plan in Ukraine.

Who is affected by the Law?

The Law primarily concerns multinationals operating in Ukraine, as well as domestic large and medium-sized businesses.

It is particularly important for the Ukrainian companies involved in a wide range of transactions with non-residents, as well as for the businesses structured with the extensive use of business vehicles in other jurisdictions.

The Law affects interests of the beneficial owners with direct or indirect (through a chain of companies) ownership of Ukrainian assets, as well as legal entities or individuals relying on double tax treaties. Businesses operating in Ukraine through permanent establishments are also significantly affected.

Finally, the Law introduces a brand new tax instrument for the Ukrainian residents with business or investments abroad – the rules on controlled foreign companies (“CFC”).