Adoption of the Law on Taxation of Controlled Foreign Companies (CFCs)

These changes have a significant impact on entrepreneurs and businesses with foreign assets. The amendments to the draft law temporarily exempt taxpayers from penalties and administrative liability for violations related to CFCs for the period from January 01, 2022 to six months after the end of martial law.

The main provisions of the new law include:

• No fines: Taxpayers are exempted from penalties for violations under paragraphs one through eight of clause 120.7 of the Tax Code of Ukraine (TCU) for the period of martial law and six months after its termination.
• Administrative and criminal liability: Taxpayers and their officials are not subject to administrative and criminal liability for violations related to the application of Article 39-2 of the TCU for the specified period.
• Limited access to information: Information and documents received by the controlling authorities in accordance with Article 39-2 of the TCU: 

- Considered to be restricted information that cannot be requested or transferred to law enforcement agencies upon their request or within the procedures provided for by the Criminal Procedure Code of Ukraine.

- They cannot be used as evidence in criminal proceedings in accordance with Article 84 of the Criminal Procedure Code of Ukraine.

Currently, the law must be signed by the President of Ukraine. Its adoption is an important step in the context of adapting tax legislation to the current environment and supporting taxpayers during martial law.

If you have any questions or need additional information about tax audit services, reach out to BDO in Ukraine specialists. Our team of experts is ready to provide professional advice and help you solve your tax and financial issues.