Letter of the State Fiscal Service of Ukraine №21674/7/99-99-14-01-02-17 dd 14.08.2017

1. If a non-resident, whose form of business entity is included in the List of Forms of Business Entities, has paid a profit tax (corporate tax) in the reporting year, the taxpayer’s business transactions with him are recognized as uncontrolled without other criteria for the recognition of such transactions as controlled.
2. The State Fiscal Service recommends taxpayers to receive a document confirming the payment of income tax (corporate tax) by a non-resident counterparty issued by the financial (tax) authority of the respective country, in a form stated by the legislation of that country. Such a document must be duly legalized and translated in accordance with the legislation of Ukraine.
3. Non-resident who does not pay income tax (corporation tax) is a non-resident who is exempted from paying tax in the reporting year, regardless of the reasons for such exemption, or a non-resident who pays income tax (corporate tax) at a rate of 0%.
4. The status of the tax residence can be confirmed by a certificate issued by the competent (authorized) authority of the respective country, as defined by the international agreement of Ukraine, in a form approved in accordance with the legislation of that country, and which should be duly legalized and translated in accordance with the legislation of Ukraine.
5. Business transactions with non-residents, form ofbusiness entity of which is included in the List of Forms of Business Entities, may be recognised as controlled, subject to the achievement of a value criterion, starting from the date of the List’s entry into force. In order to establish the compliance with the value criterion, calculation of the total amount of taxpayer’s annual income (150 million UAH) should be made for the complete 2017 year, and the volume of transactions with such a non-resident (10 million UAH) must be calculated starting from the date of the List’s entry into force (from July 27, 2017).

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