Resistance to BEPS to complicate work of Ukrainian business abroad – first deputy NBU governor
The introduction of the action plan on base erosion and profit shifting (BEPS) is a global trend, resistance to which could result in the change of registration of many Ukrainian businesses, according to First Deputy Governor of the National Bank of Ukraine (NBU) Kateryna Rozhkova.
"Ukraine has no other way but to follow the BEPS action plan. The banking secrecy, in its classical sense, is already dying: globalization, convergence, financial technologies - all this erases the borders between countries. We can do nothing, but then we will remain on the margins," she said in an interview with Interfax-Ukraine.
As an example of possible consequences Rozhkova mentioned the impact of the U.S. foreign account tax compliance act (FATCA) on business.
"The United States adopted its act in 2010, signed it with all countries and today exchanges this information unilaterally. If you refuse to be transparent, the world community puts you in a "gray zone." This, in turn, means that your business, which intends to enter international markets, will have to meet higher requirements: they will carefully check KYC [know your client] files, all transactions, contracts... All these will complicate the work of the business, and if companies cannot conduct business with the Ukrainian "residence," then we will eventually lose them," she said.
According to Rozhkova, the experience of countries implementing the BEPS action plan shows a significant increase in tax revenues by expanding the tax base, despite the fact that the tax burden in these countries has declined. At the same time, she added that for this it is important to take care of the comfort environment for the business and, in particular, to provide an understandable and acceptable tax burden at the initial stage, the quality administration of taxes and the easiness for paying taxes.