In response to recent inquiries, we would like to provide a brief clarification of certain legislative provisions concerning the obligations of permanent establishments (PEs) of non-resident entities operating in Ukraine.
It is worth noting that in 2025 Ukraine has continued the implementation of the international standards on tax transparency and anti-tax avoidance measures in line with the OECD’s BEPS (Base Erosion and Profit Shifting) Action Plan. One of the key areas of this reform has been the modernization of the tax regime applicable to non-residents conducting business activities in Ukraine through permanent establishments.
Based on a systematic analysis of current legislation, we note that, pursuant to the updated provisions of the Tax Code of Ukraine, all non-residents who either maintain an actual permanent establishment in Ukraine or carry out activities that fall under the legal definition of a permanent establishment are required to:
• register with the Ukrainian tax authorities as the corporate income taxpayers;
• submit the tax returns quarterly or annually (depending on their accounting system);
• maintain proper records of the income derived from Ukrainian sources and report such income at the corporate tax rate of 18%.
In addition, multinational enterprise (MNE) groups with operations in Ukraine may, under certain conditions, be required to file Country-by-Country Reports (CbCR), provided they meet the consolidated revenue threshold. These requirements are governed by subparagraph 39.4.10 of Article 39 of the Tax Code of Ukraine and by the Procedure for Completing the Country-by-Country Report of a Multinational Enterprise Group, approved by Order No. 764 of the Ministry of Finance of Ukraine dated 14 December 2020. The introduction of such reporting aims to assist the State Tax Service in detecting abuses related to transfer pricing and the artificial shifting of profits to low-tax jurisdictions.
Non-residents that fail to comply with these obligations may be subject to financial liability, including the assessment of additional tax liabilities based on indirect methods and the imposition of penalties for failure to register or submit tax returns.
Overall, it can be concluded that these legislative changes are aimed at strengthening the state’s oversight over the activities of foreign entities operating in Ukraine.
We trust that this information will be helpful to you. Please note, however, that this overview is general in nature and does not cover all possible legal aspects or risks, which may be addressed in a separate, detailed legal consultation. Should you have any questions or require further assistance, please do not hesitate to contact us.
Author: Dmytro Dovzhyk, Attorney-at-Law and Partner at ArtesLex
11 June 2025
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