On March 20, the Verkhovna Rada of Ukraine supported in the second reading and in general the draft Law of Ukraine “On Amendments to the Tax Code of Ukraine on the Implementation of the International Standard for the Automatic Exchange of Information on Financial Accounts”
Source:https://itd.rada.gov.ua/billInfo/Bills/CardByRn?regNum=8131&conv=9
The draft law is designed to ensure that Ukraine implements the OECD-approved General Standard on Reporting and Due Diligence on Financial Accounts. The implementation of the CRS Standard into national legislation is a prerequisite for Ukraine’s accession to the international system of information exchange under the Multilateral Agreement of Competent Authorities on the Automatic Exchange of Information on Financial Accounts, which Ukraine, represented by the State Tax Service, joined in August 2022.
In particular, the main provisions of the draft law establish
- the functions and rights of regulatory authorities to ensure that the information required for the exchange is obtained in accordance with the CRS Standard
- requirements for financial agents to apply the rules of the CRS Standard when conducting due diligence on financial accounts and to submit to the State Tax Service information on financial accounts of account holders who are tax residents of other jurisdictions – partners in the exchange of information requirements for the minimum period of storage of documents and the procedure for providing such documents to the supervisory authority by certain business entities;
- the procedure for obtaining information for tax purposes by the supervisory authority in accordance with the CRS Standard and upon request from the competent authority of a foreign jurisdiction on the basis of an international agreement;
- an effective mechanism for monitoring compliance with the requirements of the CRS Standard by financial agents.
Starting from July 01, 2023, the draft law requires reporting financial institutions of Ukraine to apply due diligence measures to financial accounts to determine whether the accounts are subject to automatic exchange (whether the accounts are reportable). The CRS standard contains separate due diligence rules for accounts opened before and after July 1, 2023. Therefore, financial accounts are divided into “new accounts” and “existing accounts” based on the time of opening. Depending on this, separate rules for the due diligence of accounts and deadlines for completing this verification are established.
The draft law was developed with the expert support of the Global Forum on Transparency and Exchange of Information for Tax Purposes and the European Union’s Public Finance Management Support Program for Ukraine (EU4PFM).
The adoption of this Law will ensure the proper fulfillment of Ukraine’s international obligations on the exchange of information for tax purposes, increase the transparency and reliability of Ukraine as a partner state in the exchange of information and will help prevent tax evasion and increase compliance with tax legislation.