How to avoid CFC fines: what you need to do right now
Hello! If you are an entrepreneur with controlled foreign companies (CFCs), there is good news: under the new Law No. 9319, fines for violating CFC rules are temporarily not applied. But there is an important nuance – you can avoid fines only if you take certain actions. So let’s figure out what exactly you need to do to protect yourself.
What happened?
Law No. 9319 amended the Tax Code of Ukraine, and now, if you violated the CFC rules from January 1, 2022 until the last day of the month in which martial law is lifted, fines will not be applied. But! There is one condition: you must fulfill all your obligations within six months after the end of martial law.
What are these obligations?
Filing CFC reports.
If you have not yet filed reports, you need to do this. Carefully check whether everything is prepared correctly, because any mistake can raise questions.
Paying taxes.
If your company has tax obligations in Ukraine, they must be fulfilled.
Transfer pricing documentation (TPD).
If transactions with KIC fall under the control of TDC, prepare all the necessary documentation.
What does this mean in practice?
Imagine that you will not be fined now, but this does not mean that the tax authorities have “forgotten” your obligations. If you do not submit reports or fulfill other requirements by the established deadline, fines will be applied, and there is no way to avoid them.
What to do right now?
Analyze your KIC.
Check if you have any reports that still need to be submitted.
Prepare evidence.
Supporting documents such as financial statements, contracts or bank statements will help avoid problems.
Do not delay.
You have the opportunity to prepare everything now, so that you can calmly wait for the end of martial law.
Seek advice.
If something is unclear or you need to understand the details, it is better to consult a tax lawyer immediately.
Summary
The law provides for the possibility of avoiding penalties for CIT, but this is not an “indulgence”. This is just a chance to correct mistakes without financial losses. Your task is to fulfill all the requirements before the deadline.
Don’t delay! Attentiveness and timeliness in this matter can save you a lot of nerves and money.
If you need help in preparing reports or consultation, we are always ready to lend a shoulder. Contact us, and we will figure it out together!
