The business asks to change the rules leading to double taxation of Ukrainian income

This week, the Committee on Finance, Tax and Customs Policy of the Russian Federation supported the important for business and citizens bill No. 8137 on improving the taxation of controlled foreign companies (CFCs). The European Business Association (EVA) welcomes this decision and hopes that the parliament will soon consider the draft law and adopt it as a law.

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Also, the Association turns to the Committee regarding the second important issue concerning thousands of Ukrainians. We are talking about difficulties with the realization of the right to offset in Ukraine taxes paid by Ukrainians abroad. A meeting with the head of the committee, Danylo Hetmantsev, is scheduled to take place at the EVA today, at which the community also plans to raise this issue.

So, according to the current rules, when calculating taxes in Ukraine, it is allowed to take into account the amount of taxes paid abroad. In order to obtain the right to credit taxes paid outside of Ukraine, the payer must obtain from a foreign tax certificate the amount of tax paid, as well as the base/object of taxation. The specified document is subject to legalization in the country.

“Millions of Ukrainians have found themselves abroad against their will. Many received income from which taxes had already been paid abroad. Ukrainians are obliged to declare foreign income in Ukraine. However, without obtaining a foreign certificate and without its legalization, those bona fide Ukrainians who declare income in Ukraine that is already taxed abroad will be forced to pay tax on the same income again in Ukraine,” the message says.

It is noted that the majority of Ukrainians do not have experience in obtaining certificates of paid taxes and legalization of such certificates from foreign tax authorities. Some categories of citizens (men from 18 to 60 years old) do not even have the opportunity to go abroad to obtain legalized documents for paying taxes abroad.

“The problem is more than obvious. It is a pity that the bodies responsible for the formation of the fiscal policy did not take care in time to solve it. Therefore, the Association appeals to the Cabinet of Ministers of Ukraine, the Committee of the Russian Federation on Finance, Tax and Customs Policy and to interested deputies with a request to develop and implement as soon as possible a mechanism that would prevent double taxation of the incomes of Ukrainians,” the Association said.

What is offered

For example, for the period of martial law, it is proposed to cancel the requirement to obtain a certificate from the foreign tax office, and to confirm the payment of taxes abroad with appropriate bank documents.

It would also be appropriate to cancel the requirement of legalization of certificates issued by foreign tax authorities for the period of martial law. The community is ready to participate in the search for an appropriate solution and work on the document that will be drawn up.

“For individuals, the deadline for submitting income declarations for the previous hour in Ukraine expires by May 1. We realize that by this date it is unlikely that we will be able to develop and implement solutions.

However, there is time to correct the situation and change the rules before the deadline for paying taxes in Ukraine, so that Ukrainians can submit a clarifying declaration and take into account taxes paid abroad,” the European Business Association emphasized.

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Source: Ministry of Finance

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