REPORTING ON CONTROLLED FOREIGN COMPANIES: CHALLENGES IN IMPLEMENTATION AND AREAS FOR IMPROVEMENT IN UKRAINE
DOI:
https://doi.org/10.60022/3(3)-31SKeywords:
report on controlled foreign companies, controlled foreign companies, taxation, tax audit, transfer pricingAbstract
This article examines current issues related to the functioning and legal regulation of the preparation and use of reporting on controlled foreign companies (CFCs) in Ukraine in the context of global trends in tax transparency and the implementation of the BEPS Action Plan. It is noted that, given the increasing mobility of capital, tools for monitoring the activities of transnational structures are becoming critical for countering tax base erosion and profit shifting. Emphasis is placed on the fact that the calculation of adjusted profit is performed manually, which creates an additional administrative burden on tax officials and increases the risk of subjective errors. A comparative analysis of CFC reporting and Country-by-Country Reporting (CbCR) was conducted. It has been demonstrated that these two instruments have different functional focuses and levels of application (CbCR operates at the macro level for global analytics and the identification of aggressive tax planning risks, whereas CFC reporting functions at the micro level and performs the direct fiscal function of assessing tax liabilities). It is argued that an effective tax control system is possible provided these tools are combined. A conceptual model of the CFC report form is proposed, based on the principles of simplification and the use of modern digital technologies. It is noted that the implementation of the proposed optimized model will eliminate duplication of information and harmonize national procedures with international standards. Emphasis is placed on the fact that the transformation of the reporting mechanism will ensure a high level of transparency and the effectiveness of the state’s fiscal control.
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Copyright (c) 2026 Галина Борисівна Назарова, Ірина Кузьмівна Дрозд, Тетяна Володимирівна Фоміна (Автор)
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