This law implements anti-tax-avoidance and tax transparency measures recommended by the OECD’s BEPS project to combat tax base erosion and profit shifting. Important changes combat tax-avoidance schemes that exploit loopholes in double-taxation agreements with complex international constructions to and unregistered permanent establishments. The law also contains general changes to improve the tax system.
The changes constitute an important step ahead towards strengthening Ukraine’s tax receipts and improving the business environment. Whilst companies will benefit from many fixes to existing problems in the tax system, the use of complex international tax avoidance schemes will be significantly discouraged. The law also represents a much-needed shift in the philosophy of tax administration from “form over substance” to “substance over form”. For this shift to translate from legislation to actual practice, however, implementation will play a key role and solid training of tax authorities’ staff will be required.