Corporate Tax 2026 Comparisons

Corporate Forms

The most common form of business presence in Ukraine is the limited liability company (LLC).

Another frequently used form of business organisation is the joint-stock company (JSC), which may be established as either a public or private company. 

Both LLCs and JSCs have legal personality, and the liability of their members or shareholders is limited to the amount of their contributions or the value of their shares, except in cases of intentional bankruptcy.

Alternative Forms

There are also other forms of corporate structures that have the status of legal entities, such as additional liability company, a general partnership and a limited partnership. These forms are rarely chosen in practice. The liability of their members is not limited to capital contributions.

Collective investment vehicles, such as unit investment funds and corporate investment funds managed by licensed asset management companies, are often used by local and foreign investors for investment purposes.

Alternative forms of business presence include branches and representative offices of foreign companies.

Individuals may conduct business after registering as private entrepreneurs.

Tax Treatment

All corporate structures are taxed as separate legal entities, except for collective investment vehicles, which are generally exempt from Ukrainian corporate income tax.

Branches and representative offices of foreign companies are subject to corporate income tax based on the arm’s length principle. If the activities of the representative office do not give rise to a permanent establishment of its foreign head office, such a representative office may be exempt from the Ukrainian corporate income tax.

Individuals registered as private entrepreneurs are subject to taxation under special rules.

In general, Ukrainian legal entities are not treated as fiscally transparent. However, if a Ukrainian resident owns a foreign company, the profits of that company may be attributed to a Ukrainian tax resident under the controlled foreign companies (CFC) rules.

LLCs are the most common entities used across all industries.

Collective investment vehicles are commonly used by investors, as the income of such vehicles is exempt from Ukrainian corporate income tax. Profits derived by collective investment vehicles are subject to tax only upon distribution to investors.

As a general rule, all companies incorporated in Ukraine qualify as tax residents of Ukraine. There is no procedure or mechanism by which a Ukrainian company may change its tax residence or cease to be a Ukrainian tax resident.

A foreign legal entity may be recognised as a tax resident of Ukraine if its place of effective management is located in Ukraine.

In Ukraine, there are two taxation systems – the general system and the simplified system – which may be applied to legal entities and private entrepreneurs.

General System

The profits of legal entities are subject to CIT at the standard rate of 18%. Financial institutions and banks are subject to higher CIT rates (25% / 50%).

The profits of individual entrepreneurs (if they are not subject to the simplified taxation system) are subject to PIT at the standard rate of 18%, plus a military levy of 5%.

Simplified System

Under the simplified taxation system, a unified tax is paid. The unified tax system comprises four groups of taxpayers. In order to elect the simplified taxation system (a specific group thereof), legal entities and individual entrepreneurs must meet certain criteria.

• Group I – applicable to private entrepreneurs with no employees who are engaged exclusively in the retail sale of goods or the provision of household services to the public, with annual income not exceeding EUR28,500. The fixed unified tax rate is EUR7 plus EUR17 military levy per month.
• Group II – applicable to private entrepreneurs with no more than 10 employees, engaged in certain types of activities, primarily the provision of services to the public, with annual income not exceeding EUR143,800. The fixed unified tax rate is EUR35 plus EUR17 military levy per month.
• Group III – applicable to legal entities and private entrepreneurs with annual income up to EUR200,000. The unified tax rate is 5% of gross revenues if the taxpayer is not registered as a VAT payer, or 3% of gross revenues if registered as a VAT payer, plus a 1% military levy on all revenues.
• Group IV – applicable exclusively to agricultural producers (legal entities and private entrepreneurs whose agricultural production accounts for more than 75% of their revenues). The tax is levied per hectare of land at a rate ranging from 0.19% to 6.33% of the normative monetary valuation of the land.

For CIT purposes, the financial result before tax is determined as the difference between revenues and expenses, which are calculated according to the national or international accounting standards. Business income and expenses are recognised on an accrual basis (ie, allocated to the relevant reporting period in which the goods are supplied or the services are rendered, but not in the period in which they are actually received or paid).

Where the taxpayer’s annual revenue exceeds EUR800,000, companies are required to adjust their financial result before tax by applying tax adjustments. If the revenue is below this threshold, the application of such tax adjustments is optional.

The most important adjustments include:

• thin capitalisation rules;
• transfer pricing adjustments;
• royalty payments to foreign companies (limited to 4% of revenues, unless arm’s length);
• transactions with foreign companies that lack a business purpose;
• specific terms for tax depreciation; and
• limitations on the carry-forward of tax losses.

Business entities operating under the simplified taxation system do not apply accounting rules for the purpose of determining taxable profit. Instead, taxation is based on gross revenues (ie, the total revenue received without any deduction for expenses).

There are no patent / IP box rules.

Currently, Ukraine provides a number of incentives for technology investments, including the following:

• Investment projects - temporarily, until 1 January 2035, the profits of an enterprise-investor with significant investments operating under the Law of Ukraine “On State Support of Investment Projects with Significant Investments in Ukraine” are exempt from corporate income tax for a period of five years. Such entities are also entitled to VAT incentives, state support for the development of engineering infrastructure and exemptions from certain local taxes.
• Industrial parks - the profits of participants in an industrial park are exempt from CIT for a period of 10 years. However, funds saved as a result of the tax relief must be reinvested in the development of the industrial park.
• Production of eco-friendly vehicles and components thereof - temporarily, until 31 December 31 2035, profits from the production of eco-friendly vehicles and components thereof are exempt from CIT. However, funds saved as a result of the tax relief must be used for purposes of research and development activities and to increase production volumes.

Diia.City

Diia.City is a special legal regime aimed at stimulating the development of the digital economy in Ukraine. A Diia.City resident may be a legal entity registered in Ukraine that carries out activities in the IT sector, including computer programming, IT consulting, computer facilities management services and software publishing.

Diia.City residents are granted a preferential tax regime. CIT is applied at a rate of 9% under the distributed profit tax model (ie, taxation occurs only upon the distribution of dividends, royalties or certain other payments), instead of the standard 18% corporate income tax applied to total profits.

Defence City

Defence City is a special legal regime that has been introduced in Ukraine in order to strengthen the development of the defence-industrial complex.

Residents of Defence City may be legal entities incorporated in Ukraine that are engaged in the development or production of military equipment, or defence technologies, provided that at least 75% of their income is derived from such activities.

Defence City residents are entitled to an exemption from CIT. However, the exempted profits must be used for the development of the defence-industrial complex.

Under the Tax Code of Ukraine, tax losses carried forward from prior years constitute a tax adjustment. Companies are entitled to reduce their financial result before tax by the amount of the tax losses incurred in previous reporting periods.

However, specific limitations apply to large taxpayers (ie, entities whose annual revenue exceeds EUR50 million or whose total taxes paid exceed EUR1.5 million). Such taxpayers may reduce their financial result before tax by no more than 50% of the amount of accumulated tax losses from prior years. However, where the amount of tax losses carried forward does not exceed 10% of the positive tax base, such losses may be utilised in full.

Ukrainian tax legislation does not provide for the carry-back of tax losses. Tax losses can be offset against capital gains. In addition, losses cannot be offset between different taxpayers within a group, as consolidated tax grouping is not permitted.

There are thin capitalisation rules in Ukraine. The limitation on the deduction of interest expenses is implemented through a tax adjustment mechanism.

Where a taxpayer’s debt obligations to all non-residents exceed its equity by more than 3.5 times, the thin capitalisation rule applies: interest accrued in respect of all debt obligations owed to non-residents may be recognised for tax purposes in the relevant reporting period only up to an amount not exceeding 30% of the tax base for that reporting period, increased by the amount of financial expenses and depreciation deductions, as determined under the tax reporting data.

In addition, interest capitalised in the cost of non-current assets shall be taken into account solely through depreciation deductions attributable to the relevant reporting period.

It should be noted, however, that Ukraine is currently in the process of implementing the requirements of the ATAD; therefore, the rules governing the deductibility of interest may be amended and aligned with the 30% EBITDA rule.

Ukraine does not permit consolidated tax grouping for CIT purposes. Tax losses carried forward from prior tax periods may be utilised only on an entity-by-entity basis (ie, separately by each legal entity).

In Ukraine, capital gains of legal entities are not subject to a separate tax but are governed under the general CIT tax provisions. Profits derived from the sale of assets, including real estate, securities or corporate rights, is included in the financial result before tax and is subject to corporate income tax at the standard rate of 18%.

Certain adjustments may apply to transactions involving securities in accordance with the Tax Code of Ukraine.

Capital gains derived by non-residents from the disposal of Ukrainian assets (including real estate and corporate rights in Ukrainian companies) are generally subject to withholding tax in Ukraine, unless otherwise provided for under an applicable double tax treaty. Further details provided in (5.3 Capital Gains of Non-Residents).

Business entities engaged in the supply of goods and services may be required to register as VAT payers. Mandatory registration applies where the total value of taxable supplies exceeds UAH1 million (EUR20,000) over a 12-month period.

VAT is generally charged at the standard rate of 20%, although reduced rates or exemptions may apply to certain categories or transactions.

In addition, excise tax is payable in respect of the production or supply of excisable goods, such as fuel, alcohol and tobacco products.

In addition to CIT, other types of taxes may also be imposed on business entities.

1. Environmental Tax – payable in cases of emissions of pollutants into the air, discharges of substances into water bodies or waste disposal.

2. Rent Payment – payable for the use of subsoil resources, for the special use of water and forest resources and for the transportation of oil and petroleum products through main pipelines.

3. Property Tax – comprises the following:

• Real estate tax – payable on real property other than land plots;
• Transport tax – payable on vehicles that are less than five years old and have a value of EUR65,000 or more; and
• Land fee – payable in respect of land plots owned or used by the taxpayer.

Closely held local businesses usually operate in corporate forms, mainly as LLCs or private joint-stock companies. Operation as a sole proprietorship is preferred only for small-scale businesses.

Individuals engaged in independent professional activities are subject to the general taxation regime and pay PIT at a rate of 18%, plus a 5% military levy on their net income (ie, the difference between income and expenses).

The legislation does not contain comprehensive anti-avoidance rules specifically aimed at preventing individuals from assessing lower-tax corporate regimes. However, sector-specific laws (for example, those regulating the activities of attorneys, private enforcement officers and notaries) provide that such individuals may operate only as self-employed persons conducting independent professional activities and may not operate as private entrepreneurs or through incorporated entities.

In Ukraine, there are currently no rules to prevent corporations from accumulating earnings for investment purposes.

Dividends received by individuals are subject to the military levy at a rate of 5% and PIT at the following rates:

• 5% – for dividends on shares and corporate rights paid by residents that are regular corporate income taxpayers;
• 9% – for dividends on shares and corporate rights paid by non-residents, investment funds or entities that are not regular corporate income taxpayers.

Income received by individuals from the sale of shares and corporate rights is subject to the military levy at a rate of 5% and PIT at a rate of 18%. The taxable base is the investment gain, that is the positive difference between the income received from the sale of shares or corporate rights and the costs incurred in acquiring such assets.

Income from dividends is subject to PIT at rates of 5% or 9% and to a 5% military levy.

Investment income is subject to PIT at a rate of 18% and to a 5% military levy, in the same way as described in (3.4 Taxation of Individuals on Shares in Closely Held Corporations).

Withholding tax (WHT) on Ukrainian-sourced income of non-residents is generally levied at a rate of 15%, unless reduced or exempted under an applicable double tax treaty.

The tax is withheld and remitted by the Ukrainian taxpayer acting as a tax agent.

In practice, the Ukrainian tax authorities are particularly focused on WHT compliance in areas such as payments of interest, dividends and royalties to such non-residents.

As of today, Ukraine has concluded 70 bilateral international conventions for the avoidance of double taxation. The majority of these treaties are based on the OECD model.

In particular, such treaties are in force with almost all EU countries, including Cyprus, Germany, the United Kingdom, the Netherlands, Switzerland, Austria, France, Poland and others.

Cyprus and the Netherlands are among the most popular jurisdictions used by foreign investors to invest in Ukraine.

According to the Tax Code of Ukraine, exemption from taxation or the application of a reduced tax rate provided under an international treaty applies only if the non-resident is the beneficial owner of the income. However, the said requirement to be the beneficial owner applies if it is required by the relevant international (double tax) treaty. Accordingly, the Ukrainian tax authorities will examine whether the recipient of the income has sufficient economic substance and the right to dispose of such income.

In addition, treaty benefits may be denied under the principal purpose test.

It is stipulated that tax benefits in the form of exemption or reduced tax rates provided under an international treaty shall not be granted if the main purpose of the transaction was to obtain such treaty benefits. Accordingly, the Ukrainian tax authorities will assess the purpose and economic substance of the transaction in order to determine whether it was undertaken primarily to obtain tax advantages or to avoid the payment of taxes.

One of the key issues of transfer pricing regulation in Ukraine is the requirement to ensure compliance with the arm’s length principle. Under this principle, the price of a transaction between related parties (for example, between companies within the same corporate group) must correspond to the price that would have been agreed under comparable circumstances between independent parties acting at arm’s length (ie, parties that are not related to each other).

If the terms of a controlled transaction do not comply with the arm’s length principle, the taxpayer must adjust the price of that controlled transaction and, accordingly, adjust the amount of its tax liabilities to ensure compliance with the arm’s length standard.

Another significant issue is the requirement to demonstrate the existence of a business purpose (economic reason) in controlled transactions. The underlying concept is that, when entering into controlled transactions, a company must seek to obtain an economic benefit rather than a tax advantage. If a controlled transaction lacks a business purpose (economic reason), the tax authorities are entitled to disregard such transaction for tax purposes.

The portion of the price that does not comply with the arm’s length principle is treated as constructive dividends and may be subject to Ukrainian WHT at the rate of 15%, unless the applicable double tax treaty provides otherwise.

All business transactions involving the sale and/or purchase of goods and/or services through a non-resident commission agent between a resident and a non-resident fall within the definition of controlled transactions, provided that the monetary thresholds established by the Tax Code of Ukraine are met (the taxpayer’s annual revenue exceeds UAH150 million, or the aggregate value of such transactions exceeds UAH10 million per year).

In addition, transactions involving the provision of services by a non-resident commission agent to a resident principal may also be recognized as controlled transactions, provided that the general criteria for classifying transactions as controlled are satisfied (including the aforementioned monetary thresholds). In such cases, the non-resident commission agent is considered the counterparty to the controlled transaction, while the commission service constitutes the subject matter of the controlled transaction.

Where transactions are classified as controlled transactions, the resident company is required to comply with the arm’s length principle and submit transfer pricing reporting on controlled transactions in accordance with the applicable legislation.

Since Ukraine is not currently a member of the OECD, the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations are of a recommendatory nature only.

The current wording of Article 39 of the Tax Code of Ukraine is largely based on the provisions of the OECD Transfer Pricing Guidelines 2010 edition and incorporates only a limited number of provisions introduced in the 2017 edition. It also does not include the significant additions and clarifications introduced in the 2022 edition of the OECD Transfer Pricing Guidelines.

The Ukrainian tax authorities are actively monitoring compliance with transfer pricing requirements, particularly in light of the expanding international exchange of tax information.

Currently, most transfer pricing disputes in Ukraine are resolved through judicial proceedings (tax litigation). At the same time, Ukrainian legislation provides for the possibility of applying Mutual Agreement Procedures (MAP) and Advance Pricing Agreements (APA).

The MAP was introduced in Ukraine in 2020. This procedure may be initiated by any taxpayer, provided that such a right is stipulated by an applicable double taxation treaty concluded by Ukraine. Within this process, the amount of tax liabilities is agreed upon between the competent authorities of the contracting states that have concluded a double taxation avoidance convention. According to statistics published by the OECD, the use of the MAP in Ukraine remains relatively limited.

The use of the APA mechanism is also limited. This mechanism is not available to all taxpayers; it is limited to large taxpayers, defined as those whose annual revenue exceeds EUR50 million or whose total taxes paid exceed EUR1.5 million. As a result of the APA procedure, an agreement is concluded between the large taxpayer and the tax authority, establishing the criteria for determining whether the conditions of the controlled transactions carried out or to be carried out by the taxpayer comply with the arm’s length principle.

Ukrainian tax legislation allows taxpayers to make self-adjustments in respect of controlled transactions that do not comply with the arm’s length principle. In particular, a taxpayer may independently adjust the transaction price and the corresponding tax liabilities to align the transaction with the arm’s length principle.

However, Ukrainian law does not expressly provide for compensating (secondary) adjustments in the OECD sense following the settlement of transfer pricing disputes. In practice, adjustments are generally made through primary tax adjustments affecting the taxpayer’s CIT base.

If a local branch of a non-local corporation qualifies as a permanent establishment for tax purposes, its profits are subject to CIT. Unlike profits of local subsidiaries of non-local corporations, profits of permanent establishments are determined based on the arm’s length principle even if the relevant revenue threshold of UAH150 million is not met.

Capital gains of non-residents are subject to  WHT at a rate of 15%, including gains from the sale or other disposal of the following investment assets:

• securities or other corporate rights in the charter capital of legal entities resident in Ukraine, except for those traded on a specific stock exchange;
• shares or corporate rights in foreign companies (except for those traded on a specific stock exchange) if:
1. during the 365 days preceding the sale, 50% or more of the value of the shares of the foreign legal entity is derived from shares in a Ukrainian legal entity owned by that foreign legal entity; and
2. during the 365 days preceding the sale, 50% or more of the values of the shares in the Ukrainian legal entity is derived from immovable property located in Ukraine and owned by that Ukrainian legal entity.

If the applicable double tax treaty provides for different rules or lower tax rates, the rules and rates established by that treaty shall apply.

There are no specific change of control provisions that could trigger tax or duty charges. However, the underlying economic transactions, in particular disposals of Ukrainian assets (directly or indirectly), may be subject to Ukrainian taxes.

It is worth noting that changes to the legislation are currently being developed to introduce taxation upon a change of control.

Fixed formulas are not used to determine the taxable income of foreign-owned affiliates.

There are no specific rules regarding deductions for payments made by local affiliates for management and administrative expenses incurred by a non-local affiliate. A simple recharge of such costs is not allowed. Instead, a relevant service agreement should be in place. In general, deductions for management and administrative fees paid to a foreign affiliate are allowed only if they have a business purpose, relate to the business of the local affiliate and, if the transaction qualifies as a controlled transaction, comply with the arm’s length principle.

Interest paid by a resident of Ukraine to a non-resident is subject to WHT at a rate of 15%, unless the applicable double tax treaty provides otherwise. If transactions with related non-resident parties are classified as controlled transactions, the transfer pricing rules must also be applied.

In addition, Ukrainian tax legislation establishes limitations on the deductibility of interest paid to non-residents. In particular, where a taxpayer’s debt obligations to all non-residents exceed the taxpayer’s equity by more than 3.5 times, the thin capitalisation rule applies. In this case, interest accrued in the accounting records in respect of all debt obligations to non-residents may be deducted for tax purposes during the reporting period only up to 30% of the calculated taxable profit for the reporting period, increased by the amount of financial expenses and depreciation deductions as reflected in the tax reporting data.

In addition, interest that has been capitalised as part of the cost of non-current assets may be recognised for tax purposes only through the portion of depreciation deductions attributable to the relevant reporting period.

Foreign-source income of Ukrainian resident legal entities is included in their overall taxable income and is taxed on a general basis (CIT at a rate of 18%). At the same time, taxpayers are entitled to a foreign tax credit in respect of taxes paid abroad, subject to the conditions set out in the Tax Code of Ukraine. The amount of the foreign tax credit cannot exceed the amount of Ukrainian tax payable in respect of the same income.

The following taxes paid in foreign jurisdictions are not eligible for credit against Ukrainian tax liabilities:

• taxes on capital/property and capital gains;
• postal taxes;
• sales taxes; and
• other indirect taxes.

The crediting of taxes paid abroad is permitted only if the taxpayer provides written confirmation issued by the competent tax authority of the foreign state confirming payment of the relevant tax and provided that Ukraine has concluded an international treaty for the avoidance of double taxation with that state.

In certain instances, dividends received from foreign subsidiaries may be exempt from Ukrainian taxes.

In addition, the profits of controlled foreign companies may be subject to Ukrainian CIT.

Foreign-source income is not exempt from corporate income tax in Ukraine, except for dividends received from foreign subsidiaries, provided that the relevant requirements are met.

As a general rule, expenses incurred in generating foreign income are deductible.

Dividends received by Ukrainian companies from foreign subsidiaries are included in the financial result before tax as income. However, the Tax Code of Ukraine provides for a downward adjustment to the financial result in respect of such income.

In particular, the financial result before tax may be reduced by the amount of dividends received from non-resident companies, provided that:

• the Ukrainian company holds at least 10% of the capital of the non-resident; and
• the non-resident is not incorporated in a low-tax jurisdiction (unless that jurisdiction has a double taxation treaty with Ukraine).

Intangibles developed by local corporations can be used by non-local subsidiaries based on the relevant transfer agreements (when the intangible assets are fully transferred to the non-local subsidiaries) or under licensing or service agreements. In both cases, the relevant payments received by the local corporations constitute taxable income. If the intangible assets are transferred or made available for use free of charge, the tax authorities may impute deemed income to the local corporation.

Where intangible assets developed by Ukrainian companies are fully transferred to non-resident related parties (eg, through a sale or contribution to capital), such transactions are treated as supplies for tax purposes. The principal tax consequences in Ukraine include the accrual of VAT at the standard rate of 20% (or 0% in the case of an export) and the recognition of income for corporate income tax purposes.

If intangible assets are made available for use by foreign companies, the VAT treatment of license or service fees will depend on the scope of the rights granted to such foreign companies. If the relevant fees qualify as royalties, they will be exempt from VAT.

The adjusted profit of a CFC is taxed in Ukraine at the level of the controlling person, which may be an individual or legal entity resident in Ukraine that:

• directly or indirectly holds more than 50% of the shares in a foreign company; or
• holds more than 10%, provided that Ukrainian residents collectively hold more than 50% of such foreign company; or
• exercises de facto control over such company.

The profit of a CFC is determined on the basis of the financial statements of the CFC for the relevant calendar year and is subsequently adjusted for tax differences. The adjusted CFC profit is included in the taxable profit of a legal entity (or the taxable income of an individual) in proportion to the participation interest held by the controlling person in the CFC. The tax rate applicable to CFC profits for legal entities is 18%.

At the same time, the adjusted CFC profit is exempt from taxation in Ukraine if one of the following conditions is met:

• there is a double taxation avoidance agreement or an information exchange agreement between Ukraine and the jurisdiction of incorporation of the CFC, and:
1. the CFC pays corporate income tax at an effective rate of at least 13%; or
2. the share of passive income of the CFC does not exceed 50% of its total income;
• the aggregate income of all CFCs controlled by the same controlling person does not exceed EUR 2 million as of the end of the reporting period;
• the CFC is a public company and its shares are traded on a recognised stock exchange;
• the CFC is a charitable organisation that does not distribute income in favour of its founders.

The Ukrainian legislature does not establish uniform rules regarding the substance of non-local affiliates. However, the Supreme Court of Ukraine has developed key approaches to assessing economic substance. According to the Supreme Court, the following criteria may indicate the presence of substance:

• qualified staff sufficient to conduct business activities (ie, presence of employees);
• the existence of a real, physical office in the country of incorporation;
• active business operations;
• bank accounts in the country of incorporation;
• local management of the non-resident’s finances within its jurisdiction, including the use of local accounting and auditing services;
• the presence of a client base in the country of incorporation; and
• the availability of sufficient equity and assets to carry out business activities.

Conversely, factors that may indicate that a non-resident is not the ultimate beneficial owner of income include the absence of actual independent business activity by the non-resident registered in a country with which Ukraine has concluded a double taxation avoidance agreement.

As a general rule, gains of local corporations from the sale of shares / corporate rights, including shares / corporate rights in non-local affiliates, are subject to Ukrainian CIT.

The gain is determined in national currency (UAH) and is calculated as the positive difference between the acquisition cost (recalculated into UAH as of the date the cost was incurred) and the sale price (recalculated into UAH as of the date of sale).

Losses incurred on the disposal of securities may be offset only against gains derived from the disposal of securities.

The Law of Ukraine “On Accounting and Financial Reporting in Ukraine” establishes the general principle of substance over form, according to which transactions are accounted for in accordance with their economic substance rather than solely on the basis of their legal form. Tax authorities apply this principle to detect tax avoidance schemes where contracts are formally drafted correctly but the transaction lacks a business purpose and is aimed solely at reducing tax liabilities. The Supreme Court of Ukraine actively applies this principle to determine whether a business transaction actually took place or existed only on paper. If a transaction lacks economic substance, its results are disregarded for tax purposes and the corresponding tax expenses or input VAT credits are denied.

As far as the application of double tax treaties is concerned, the principal purpose test and beneficial owner concept are closely monitored by the tax authorities.

In Ukraine, there are three types of tax audits:

• desk (cameral) audits;
• documentary audits (scheduled or unscheduled; on-site or off-site); and
• factual audits.

Desk audits and factual audits are not conducted on a regular basis and are carried out only when specific statutory grounds exist. Scheduled documentary audits are based on a risk-oriented approach. The frequency of such audits depends on the taxpayer’s risk level with respect to the non-payment or underpayment of taxes:

• high-risk level: no more than once per year;
• medium-risk level: no more than once every two years; and
• low-risk level: no more than once every three years.

Ukraine has made significant progress in implementing key BEPS measures, particularly through amendments to the Tax Code introduced by Law No. 466-IX of 16 January 2020 and subsequent legislative developments.

Ukraine has fully implemented all four BEPS minimum standards:

• Action 5 (Countering Harmful Tax Practices) – Ukraine has enhanced transparency through the exchange of tax information and has taken steps to address harmful preferential tax regimes.
• Action 6 (Preventing treaty abuse) – Implemented through the ratification of the Multilateral Instrument, including the introduction of the principal purpose test into double tax treaties.
• Action 13 (Transfer Pricing Documentation and Country-by-Country Reporting) – Ukraine has adopted the three-tiered documentation approach: local file, master file and CbCR.
• Action 14 (Improving Dispute Resolution Mechanisms) – Ukraine has implemented the Mutual Agreement Procedure.

Ukraine also implemented additional BEPS recommendations:

• Action 3 (Controlled Foreign Company Rules) – Implemented since 2021, requiring Ukrainian taxpayers to report and pay tax on the profits of controlled foreign companies.
• Action 4 (Limiting Base Erosion via Interest Deductions) – Thin capitalisation rules have been strengthened to limit excessive interest deductions. The existing rules are currently being revised to align with the EU Anti-Tax Avoidance Directive.
• Action 7 (Preventing the Artificial Avoidance of Permanent Establishment Status) – The definition of a permanent establishment has been broadened in line with BEPS recommendations.
• Actions 8–10 (Aligning Transfer Pricing Outcomes with Value Creation) – Ukraine has updated its transfer pricing rules to better reflect economic substance.
• Action 15 (Multilateral Instrument) – Ukraine ratified the MLI, enabling the simultaneous modification of multiple tax treaties.

Certain BEPS Actions have been introduced but remain incomplete or are not fully aligned with OECD standards:

• Action 1 (Addressing the Tax Challenges of the Digital Economy) – Ukraine has introduced VAT rules for digital services supplied by non-residents but has not yet implemented global minimum tax rules or measures for the reallocation of taxing rights.
• Action 2 (Neutralising Hybrid Mismatch Arrangements) – Ukraine lacks comprehensive rules comparable to those introduced under the EU Anti-Tax Avoidance Directive. However, the Ministry of Finance has already developed the relevant draft legislation.
• Action 5 (Substance Requirements) – While transparency measures are in place, comprehensive economic substance requirements have not yet been fully developed.

The following actions remain largely unimplemented or have been addressed to a minimal extent:

• Action 11 (Measuring and Monitoring BEPS) – Ukraine has not established a comprehensive system for collecting and analysing data on BEPS-related risks.
• Action 12 (Mandatory Disclosure Rules) – A mandatory disclosure regime has not yet been introduced.

Since joining the Inclusive Framework in 2017, Ukraine has consistently demonstrated a clear political commitment to implementing the BEPS project. The 2023–2025 BEPS Roadmap explicitly aims to align Ukraine with with international tax standards and deepen cooperation with OECD institutions. In particular, Ukraine has formally committed to the Two-Pillar Solution as part of the OECD Inclusive Framework.

• Pillar One, which aims to reallocate a portion of taxing rights over large multinational enterprises to market jurisdictions where consumers or users are located, is not currently a priority reform area in Ukraine. Priority is instead given to revenue-generating measures, particularly Pillar Two. It is worth noting that Pillar One cannot currently be implemented, as it requires conclusion and ratification of a Multilateral Convention, which has not entered into force globally. This has significantly delayed its implementation in Ukraine.
• Pillar Two, which introduces a minimum effective tax rate of 15% for large multinational enterprises, is identified as a priority in Ukraine’s National Revenue Strategy (2024–2030). Among other things, Ukrainian policy analyses emphasise the importance of introducing a Qualified Domestic Minimum Top-up Tax (QDMTT) to increase budget revenues. The implementation of Pillar Two in Ukraine is highly likely. At the same time, there are currently no tax bills registered in the Ukrainian Parliament for this purpose.

International tax has a relatively high public and regulatory profile in Ukraine, and this is likely to influence how the country implements the BEPS recommendations.

Currently, new legislation is being developed to amend the Tax Code in order to implement additional recommendations of BEPS and other obligations undertaken by Ukraine under international treaties relating to international taxation. These measures reflect the significant attention that the government devotes to international tax matters.

In addition, international taxation has traditionally been subject to increased scrutiny by the tax authorities. The State Tax Service of Ukraine actively audits cross-border transactions, particularly those involving non-residents, transfer pricing and dividend repatriation.

Ukraine's competitive tax policy is designed to attract investment and stimulate business activity through the use of preferential tax regimes. Such incentives enhance the competitiveness of Ukraine's tax system while aligning with BEPS measures.

The main features of Ukraine's tax policy aimed at enhancing its competitiveness are the preferential tax regimes available in certain sectors of the economy. Key initiatives include Diia.City, a special regime for IT companies offering tax incentives and simplified regulatory requirements; Defence City, a special regime for companies in the defence sector providing fiscal and operational benefits; incentives for investment projects aimed at promoting capital inflows and strategic development (further details are provided in 2.2 Technology Investments and 2.3 Special Incentives); and the simplified taxation system for small businesses, which reduces administrative burdens and tax rates.

The Tax Code of Ukraine does not contain specific provisions that directly classify or neutralise hybrid mismatches, as under the OECD BEPS Action 2 framework. Partial coverage of hybrid mismatch arrangements is provided through CFC rules, transfer pricing regulations and the beneficial ownership requirement. The Ministry of Finance of Ukraine has developed a draft bill to address the hybrid mismatches; however, it has not yet been registered with the Ukrainian Parliament.

There is no territorial tax regime in Ukraine for local companies. As regards Ukrainian companies, CIT is levied on the worldwide profits of Ukrainian companies. This means that a Ukrainian company must include both domestic and foreign income in its taxable base. Non‑residents are taxed only on Ukrainian‑sourced income (eg, profits from activities conducted in Ukraine).

Ukraine applies interest limitations under a thin capitalisation rule where interest on debt from non-resident parties can be limited. The basic approach is that interest is deductible only up to a certain amount relative to the taxpayer’s financial results (further details are provided in 2.5 Deduction of Interest).

There is a mechanism allowing a foreign company whose place of effective management is in Ukraine to obtain the status of a Ukrainian tax resident for CIT purposes. Foreign company registered as a Ukrainian tax resident is exempt from CIT on income derived from non-Ukrainian sources. However, the rules are ambiguous, and only a limited number of foreign companies (up to 30) have registered as Ukrainian tax residents.

Ukraine has no territorial tax regime, except for the option available to foreign companies to register as Ukrainian tax residents for CIT purposes (as discussed above in 9.7 Interest Deductibility and Territorial Tax Regime). Foreign companies registered as Ukrainian CIT residents are required to submit CFC reports, but the profits of their CFCs should not be subject to CIT in Ukraine.

Anti-avoidance rules in Ukraine are set out in national tax legislation and double taxation conventions. The main anti-avoidance rules applicable in Ukraine include:

• the business purpose (principal purpose) test, which is intended to disregard transactions or structures arranged solely to avoid Ukrainian tax;
• substance requirements for treaty benefits, under which an entity claiming a reduced WHT rate must have genuine economic presence in its jurisdiction (eg, employees, office premises and active business operations); and 
• beneficial ownership requirements, which require a foreign recipient to be the beneficial owner of the income (dividends, interest or royalties) in order to benefit from a reduced WHT rate under a tax treaty.

Payments for intellectual property (IP) to foreign recipients are not currently subject to close scrutiny by the Ukrainian tax authorities from a transfer pricing perspective. Their primary requirement is that the CUP method be used to demonstrate that such payments are at arm's length.

Ukraine treats income derived from IP and royalties as part of the general CIT base.

There are no specific preferential “patent box” regimes or special reduced-tax regimes for IP income. IP‑related revenue (eg, royalties) is taxed at the standard CIT rate (typically 18%).

For non‑resident IP right holders, royalties paid by Ukrainian companies are generally subject to a 15% WHT, unless a bilateral double tax treaty provides otherwise. The Ukrainian tax authorities scrutinise royalty payments to foreign companies and seek to deny the application of reduced WHT rates on the grounds that the recipient fails to satisfy the principal purpose test and/or the beneficial ownership test.

Ukraine has implemented country-by-country reporting (CbCR) as part of its transfer pricing and BEPS-related transparency framework. According to the Tax Code of Ukraine, Ukrainian companies that are parent entities, have been authorised by the parent entity to file the report, or belong to a group whose parent entity has no obligation to file a CbC report, and that are members of a multinational group of companies with consolidated revenue of at least EUR750 million, are required to submit a CbC report.

In addition, Ukraine has recently joined the CRS and implemented the requirements of the FATCA. These frameworks provide for the automatic exchange of information on individuals’ financial accounts between participating countries.

Ukraine has adopted tax legislation aimed at stimulating the digital economy, including a special regime for IT and technology enterprises (Diia.City), which features preferential tax treatment for digital companies and specialists (further details are provided in 2.3 Special Incentives).

In addition, there are ongoing reforms aimed at aligning Ukrainian tax law with OECD, EU and international transparency standards, including those relating to digital platforms and the reporting of income derived through such platforms.

Ukraine is currently developing a new tax regime applicable to digital platforms and digital services, which is largely modelled on the EU’s DAC7 Directive and OECD reporting standards. Under the proposed regime, digital platform operators (including foreign platforms active in the Ukrainian users) would become tax agents responsible for reporting and withholding taxes on sellers’ income. Individuals earning income through platforms would have their platform income taxed through withholding at source by the platform, often at preferential rates (eg, 5% personal income tax plus 5% military levy), simplifying compliance while imposing new obligations on platforms and their participants.

Digital services supplied by foreign providers to Ukrainian users are subject to Ukrainian VAT. Foreign service providers are required to register for VAT purposes and report and pay the tax due.

Ukrainian tax law does not contain separate rules regarding operations involving IP with residents of offshore jurisdictions. Generally, payments made for the use of intellectual property, typically in the form of royalties, are recognised as expenses. However, transactions with non-residents from low-tax jurisdictions require CIT taxpayers to adjust their financial result by increasing it by 30% of the cost of the goods and services purchased. This adjustment is not applied if the transaction is controlled and conducted in accordance with the arm’s length principle.

In addition, if the IP was initially registered in the name of the Ukrainian tax resident and subsequently transferred to a foreign company (non-resident), royalties paid for such IP are not deductible. Certain other deductibility restrictions apply to royalty payments to foreign companies (eg, more than 4% of revenues and/or if the recipient is not subject to tax on royalties, among other cases).