Automatic Exchange of Financial Information in Ukraine


The first automatic exchange of financial information under Common Reporting Standard for 2021 in Ukraine is expected to take place in 2022. This effectively means that the Ukrainian tax authorities will automatically obtain financial information regarding Ukrainian tax residents.

These new amendments will have a fundamental effect on approaches of corporate structure and international tax planning. Large Ukrainian businessmen in most cases have been using non-resident companies in their business structures for convenience purposes when transacting with international counterparties. The currency control is already quite strict in Ukraine and such additional rules could block the operative activity of Ukrainian companies in international transactions.

It has been previously possible for the Ukrainian tax authorities to have access to the records for the purposes of exchange of financial information but as this was done manually it was not time efficient or effective. The Ukrainian tax authorities have quite often requested for an exchange of financial information regarding large transactions from foreign tax bodies as well.

The Ukrainian Tax code already includes detailed regulations as to transfer pricing rules with related parties, thus preventing tax avoidance and price manipulation. 

However, with the automatic exchange of financial information data regarding operations with affiliated parties, foreign assets and other sensitive information will be automatically disclosed to the Ukrainian tax authorities.

As there has been turbulence in the Ukrainian tax system, due to historical and political reasons, this step is considered as important for transforming it into a transparent system.

It is generally accepted that Ukrainian business may not be ready yet for such amendments to actually take place. It is thus possible that the application of the adopted legislation may be extended in order to allow the necessary time for the affected stakeholders and businesses to comply with the new regulations and requirements. Otherwise, it is possible that we may face a huge number of cases brought before the courts of Ukraine by the tax authorities against Ukrainian businesses.

The experience of other states having applied similar rules is also important for Ukraine, as it would assist in finding an optimized model of transfer pricing and to prevent any potential gaps of the proposed legislation.

Here at Michael Kyprianou & Co. LLC - Ukraine, we are pleased to offer quality legal services regarding the corporate structure, as well as offering legal consultation on how a business can comply with the new legislation in Ukraine. We have fully fledged offices in Ukraine, Cyprus, Greece, Malta, United Arab Emirates and the United Kingdom. For further information or advice, please contact Dmytro Perevozchykov, Partner at Dmytro.Perevozchykov@kyprianou.com