Implementing of CFC Concept and BEPS Standards in Ukraine: Historical Analysis and Accounting-Tax Aspects
DOI:
https://doi.org/10.58423/2786-6742/2026-12-234-254Keywords:
controlled foreign company (CFC), retained earnings, international taxation, non-resident company, transfer pricing, European Union (EU), European integration, BEPS Action PlanAbstract
The article presents a comprehensive study of the theoretical foundations and practical aspects of taxing the profits of Controlled Foreign Companies (CFCs) in Ukraine, in the context of Ukraine's integration into the European and global tax environment. The paper conducts a historical-comparative analysis of the evolution of the CFC concept, ranging from the first defensive measures in the USA (Subpart F, 1962) and Germany (1972) to the formation of modern international standards enshrined in the BEPS Action Plan (Action 3) and EU Directives (ATAD I, III). The study establishes that the introduction of these regulations constituted a "global tax revolution," transforming CFC rules into a universal instrument for combating base erosion and profit shifting.
Particular attention is paid to the specifics of the "compressed evolution" of the CFC institution in Ukraine, where complex standards, developed by other countries over decades, were implemented within a few years. The legislative foundation of the reform is analyzed alongside reporting statistics: as of early 2025, over 15,000 controlling persons are registered in Ukraine, having submitted more than 39,000 reports, which have already generated over UAH 2 billion in budget revenues.
The research examines the accounting and tax treatment of CFCs, with the tax base determined from the unconsolidated financial statements of the foreign entity, adjusted for tax differences under the "arm's length" principle. The mechanism of applying differentiated rates is revealed as an effective incentive for capital repatriation to Ukraine. The role of automatic exchange of information under the Common Reporting Standard (CRS) is highlighted; its launch in 2024 marked the technological completion of the digital fiscal monitoring system.
Key risks for the business include the subjectivity of the "effective control" criteria, the risk of recognizing a CFC as a permanent establishment in Ukraine, and the significant administrative burden of restoring accounting records. The mechanism of "deferred liability" during the martial law period, which provides an exemption from fines upon the subsequent fulfillment of duties by controllers, is characterized. It is substantiated that further European integration requires adapting national legislation to economic substance requirements and preparing for the implementation of the global minimum tax (Pillar Two).
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