ACTUAL CONTROL AS A CRITERION FOR IDENTIFYING CONTROLLED FOREIGN COMPANIES

Abstract

The article examines the nature and challenges of identifying de facto control as a key criterion for determining controlled foreign companies (CFCs). It is substantiated that de facto control has an evaluative nature and is not limited to formal ownership indicators, which complicates its practical application. The study analyzes the practices of the Organisation for Economic Co-operation and Development (OECD), which provide for a comprehensive assessment of legal, economic, and factual influence in determining control. The research identifies the insufficient clarity and fragmented nature of the existing criteria for de facto control, which creates risks of ambiguous interpretation and the misidentification of formal authority as actual control. The indicators of control over a foreign company in accordance with the provisions of the Tax Code of Ukraine are analyzed, particularly the criteria and circumstances used to determine CFC status. It is established that, while these provisions outline general approaches to identifying signs and circumstances of de facto control within tax legislation, they do not ensure an objective assessment of control, thereby negatively affecting the reliability of information and increasing tax risks. The paper substantiates the need to improve the methodological approach to identifying de facto control through the assessment of a combination of circumstances, clarification of key concepts, and the implementation of the substance-over-form principle. The proposed approaches will contribute to improving the quality of accounting for CFCs, aligning with international standards, and enhancing the effectiveness of tax control.