2021: new requirements for registration of permanent establishments

2021: new requirements

On 27 January 2021, the State Tax Service of Ukraine issued a Clarification Letter on certain corporate income tax matters applicable to permanent establishments of non-residents under the new rules prescribed by the Law of Ukraine No. 1117.


Partner, Head of Technology, Tax & Legal

KPMG in Ukraine

The following items are worth specific attention:

1. Starting from 1 January 2021 a non-resident is required to register with the tax authorities at it`s PE`s location before the beginning of carrying on business activity through such PE.

2. Non-residents which already have a PE in Ukraine are required to submit documents to the controlling bodies for registration as CIT payers within three months (from 1 January2021 until 31 March 2021).

For CIT administration purposes, the PE is replaced by a non-resident carrying on business activity in Ukraine through such PE and therefore:

3. The permanent establishment must be deregistered as a CIT payer. At the same time, with respect to other taxes, such PE should:

• continue its registration with the controlling bodies (if the PE is an accredited division with the Unified State Register code) or

• be deregistered upon submitting an application to the controlling body (if the PE is not accredited as a separate division of a non-resident).

4. In the reporting period of FY2020, a PE may determine the CIT base using all three methods envisaged in Tax Code of Ukraine as effective before 01.01.2021, taking into account the requirements of Article 39 of the TCU. Furthermore, there are no obligations for the PE to file adjusted tax returns half-year and/or 3 quarters of FY2020.

5. Recognition of nonresidents as CIT payers based on place of effective management on the territory of Ukraine is postponed until 1 January 2022.

Given the above, we suggest discussing in more detail:

  1. whether the activities of a non-resident in your structure may give rise to a PE in Ukraine given the latest legislative changes,
  2. administrative actions that need to be taken before 31 March 2021 in order to avoid penalties for non-compliance under the new rules.

Оleksandr Boboshko, Director, International Tax, KPMG in Ukraine

Nina Matviienko, Senior consultant, International Tax, KPMG in Ukraine

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