SUBMISSION OF A FULL REPORT ON CIC

In this article, I would like to shed light on the issue of submitting a full report on CIC.

We remind you that the deadline for submitting the report on the CIC was May 1, 2024.

However, there are cases when the CIC report cannot be submitted by May 1, 2024, for objective reasons.

Let’s consider in detail which cases we are talking about.

Who should submit the abbreviated report on CIC?

According to clause 39-2.5.4. PKU if the controlling person is unable to ensure the preparation of financial statements of the controlled foreign company and/or the calculation of the adjusted profit of the controlled foreign company before the deadline for submitting the annual declaration on property status and income or the tax declaration on the income tax of enterprises, such controlling person submits a report on controlled foreign companies in an abbreviated form, which contains only the information provided by subparagraphs “a” – “c” of subparagraph 39-2.5.3 of this clause.

That is, an abbreviated report is submitted if, as of May 1, 2024, the report of the controlled company for 2023 is not yet ready and has not yet been submitted in the country of registration, or if the controlling person for some reason does not have time to submit a full report on CIC because there are nuances regarding the preparation financial reporting.

According to clause 39-2.5.4 of the PKU, part 2, the controlling person is obliged to submit a full report on controlled foreign companies by the end of the calendar year following the reporting (tax) year. If, according to such a report, the total taxable income, the object of taxation of corporate income tax of the controlling person increases, such person shall submit a clarifying annual declaration on property status and income or a tax declaration by the end of the calendar year following the reporting (tax) year from corporate income tax. At the same time, fines and/or fines are not applied.

What information should a full CIC report contain?

The Full Report provides more details, including information on the income, holdings, and tax obligations of CICs. Failure to comply or failure to report may result in fines.

What are the specifics of CIC taxation?

According to the legislation, the adjusted profit of the CIC is not taxable if:

• There is an agreement on the avoidance of double taxation or the exchange of information between Ukraine and the country where the CIC is located, and if the CIC pays an income tax of at least 13% or passive income does not exceed 50% of the total income.
• The total income of all CICs of one controlling person is less than EUR 2 million.
• CIC is a public company with shares on a recognized stock exchange.
• CIC is a charitable organization that does not distribute income in favor of the founders.

What penalties are provided for late submission of a CIC report and for failure to submit a CIC report?

According to the Explanation of the State Tax Service of Ukraine, Art. 120.7. Late submission of the Report by the controlling person entails the imposition of a fine in the amount of one amount of the subsistence minimum for an able-bodied person, established by law on January 1 of the tax (reporting) year, for each calendar day of non-submission, but no more than 50 amounts of the subsistence minimum for an able-bodied person established by law by law on January 1 of the tax (reporting) year.​​

In accordance with clause 120.7 of Art. 120 of the Code of Civil Procedure, failure to submit a Report by the controlling person entails the imposition of a fine in the amount of 100 times the subsistence minimum for an able-bodied person, established by law on January 1 of the tax (reporting) year.

Conclusions

• Penal sanctions are not applied to controlling persons who managed to submit a full report on CIC by May 1, 2024, and a shortened report in accordance with this date. Those who submitted an abbreviated report on CIC must submit a full report on CIC.
•  by the end of the calendar year. Penalties are applied to those controlling persons for late submission of the CIC report or in case of failure to submit the CIC report in the amounts indicated above.

Do not delay in submitting the CIC report and contact us, we will help you prepare and compile the CIC report and are ready to answer any of your questions regarding CIC rules and taxation.​​