Ukraine signs convention to prevent profit shifting
Ukraine's Acting Finance Minister Oksana Markarova has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, or the MLI Convention.
The MLI Convention is an agreement enabling a participating country to make simultaneous amendments to all or selected conventions on the avoidance of double taxation, the Ukrainian government's website said.
The convention was signed in London on July 23.
It was signed due to the fact that on January 1, 2017, Ukraine joined the Extended Cooperation Program of the OECD and thus committed itself to implementing the minimum standard of the BEPS action plan.
Mandatory for Ukraine are four of the 15 BEPS plan actions (minimum standard): action 5: "Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance"; action 6: "Preventing the Granting of Treaty Benefits in Inappropriate Circumstances"; action 13: "Transfer Pricing Documentation and Country-by-Country Reporting"; action 14: "Making Dispute Resolution Mechanisms More Effective."
The MLI is action 15 of the BEPS action plan. By signing and ratifying the MLI Convention, Ukraine complies with actions 6 and 14 of the BEPS action plan which are a part of the minimum standard and are mandatory for Ukraine.
This Convention will make it possible to reduce the shifting of capital from Ukraine to tax havens aiming to minimize due taxes. This will contribute to an increase in the tax revenues in Ukraine.
"The implementation of the BEPS Actions will help to harmonize international tax rules between over 70 countries around the world and to create a more transparent tax environment. Having signed the MLI, we will be able to make necessary amendments to the existing international Double Taxation Treaties between Ukraine and other countries," Markarova said at the signing ceremony.
The Ukrainian parliament shall ratify the MLI Convention.