IMF国际货币组织全球-Ukraine_Technical-Assistance-Report_79页_1mb

Summary of the Technical Assistance Report on Ukraine: Distributed Profit Tax, Voluntary Disclosure of Assets, and BEPS Implementation

Core Content

This Technical Assistance Report (TAR) was prepared by the International Monetary Fund (IMF) Fiscal Affairs Department (FAD) in response to a request from the Ukrainian Ministry of Finance (MoF). The report analyzes three key tax policy proposals: the replacement of the current Corporate Profit Tax (CPT) with a Distributed Profit Tax (DPT), the implementation of a Voluntary Disclosure (VD) program, and the application of Base Erosion and Profit Shifting (BEPS) measures. The main goal is to assess the feasibility and implications of these reforms for Ukraine's tax system and economy.

Main Views and Key Information

1. Distributed Profit Tax (DPT)

• Proposal Overview: The DPT, also known as the Exit Capital Tax (ECT), is proposed to replace the CPT. It taxes profits only when distributed, either as dividends or deemed dividends (e.g., interest, royalties, or cross-border transfer pricing adjustments).
• Alleged Benefits:
  • Simplifies the tax system by removing the need to track revenues and expenses.
  • Provides an "escape route" for taxpayers from perceived arbitrariness or corruption in the tax administration.
  • Encourages more internal resources for enterprises to invest.
• Key Concerns:
  • Revenue Loss: The DPT is expected to cause a significant and sustained decline in tax revenue. For example, it is estimated to reduce CPT collections by 1.7% of GDP annually.
  • Regressive Impact: The DPT would shift the tax burden more towards shareholders, increasing the regressive nature of the tax system.
  • No Evidence of Increased Investment: There is no empirical evidence that DPT increases private investment, as seen in countries like Estonia, Georgia, and North Macedonia.
  • Complexity: The DPT introduces complexities in verifying dividend distributions and applying transfer pricing rules, increasing the administrative burden on the tax authority (SFS).
  • Inefficient Compensation Mechanisms: The proposed compensation for lost revenue (e.g., VAT increases or public expenditure cuts) would negatively affect low-income households and is considered inefficient.

2. Voluntary Disclosure Program (VD)

• Program Overview: The VD program aims to encourage taxpayers to disclose non-declared assets, offering a 9% fee in lieu of outstanding taxes and immunity from prosecution.
• Benefits:
  • Broadens the tax base through the annual returns of disclosed assets.
  • Can help address the issue of large amounts of foreign-held assets not being taxed in Ukraine.
• Concerns and Recommendations:
  • Fee Structure: The 9% fee is criticized as being too low and potentially violating the principle of horizontal fairness.
  • Asset Valuation: Assets must be valued using bank statements and independent valuers in their jurisdictions.
  • Centralized Management: A centralized, independent Amnesty Unit, managed by the NBU and SFS, is recommended to handle VD applications and payment arrangements.
  • AML and CTF Measures: The VD program must be accompanied by strict anti-money laundering (AML) and counter-terrorist financing (CTF) measures to prevent abuse.
  • Regional Implementation: The current draft of the VD program is based on regional SFS adjudication, which is not ideal; a centralized approach is advised.

3. BEPS Implementation

• Overview: The report evaluates the implementation of BEPS actions, particularly those related to international taxation.
• Key Actions:
  • CFC Rules (Action 3): These are proposed to target controlled foreign companies. The report suggests applying them to the 'first onshore' person rather than tracing back to the ultimate beneficial owner.
  • Interest Deduction Limitation (Action 4): The report recommends limiting interest deductions to net interest expense and exempting the financial sector from this rule.
  • PE Definition (Action 7): The definition of Permanent Establishment should be made equally applicable to onshore and offshore entities.
  • Transfer Pricing (Actions 8–10): Transfer pricing rules should be simplified and aligned with international standards.
  • Country-by-Country Reporting (Action 13): This is considered a positive step to enhance transparency and tax base monitoring.
  • Mutual Agreement Procedures (Action 14): These are recommended to resolve disputes and prevent double taxation.
• Challenges:
  • Some complexities are inherent to the BEPS framework and may not be easily resolved.
  • The report highlights the need for technical improvements, particularly in the areas of CFC, PE, and TP rules.

Conclusion

The report concludes that the DPT is a poor tax policy choice for Ukraine, as it risks significant revenue loss and does not address the underlying issues of corruption or institutional inefficiencies. Instead, it recommends upgrading the current CPT system, especially in terms of international taxation, to align with BEPS standards. A well-designed VD program could help improve the tax base, but it must be implemented carefully to avoid abuse and ensure fairness. The report also emphasizes the importance of strengthening anti-abuse provisions and improving the efficiency and transparency of the tax administration.