The changes are provided by the law № 466-IX on improving the administration of taxes, elimination of technical and logical inconsistencies in tax legislation. It will be recalled that most provisions of Law № 466-IX came into force on May 23, the rest come into force on July 1, 2020 and January 1, 2021.

Thus, a new concept of "controlled foreign company"  has been introduced into the TCU, to which the updated Article 392 of the TCU is devoted.
In particular, a controlled foreign company is any legal entity registered in a foreign state or in a territory recognized under the control of a natural or legal person resident in Ukraine in accordance with the rules set out in the Tax Code. Simply put, these are companies registered abroad, but controlled by residents of Ukraine.
A legal entity may be a corporate entity (association) or an organization endowed with the right to own assets, have rights and responsibilities and carry out activities on its own behalf and independently of the founders, participants or form of ownership. The presence of the status of a legal entity in a controlled foreign company is recognized in accordance with the legislation of its registration.

In some cases, a foreign entity without the status of a legal entity can be equated to a controlled foreign company:

• partnerships,
• trust,
• funds,
• other institutions and organizations established on the basis of an agreement or law of a foreign state (territory), etc.

Non-resident entities whose organizational and legal form is included in the special list of the Cabinet of Ministers are equated to entities without the status of a legal entity.

The controlling person is a natural or legal person - a resident of Ukraine, who is a direct or indirect owner (controller) of a controlled foreign company.

The taxpayer in respect of the profits of a controlled foreign company is the controlling person (individual or legal entity). That is, the latter will pay income tax in proportion to the share they own in the CEC. The controlled companies will report to the tax authorities on all transactions with non-residents.
The object of taxation for personal income tax or corporate income tax of a controlling person is a part of the adjusted profit of a controlled foreign company, proportional to the share owned or controlled by such natural or legal person. Adjusted profit of a controlled foreign company is recognized as the profit of a controlled foreign company before taxation in accordance with its unconsolidated financial statements, taking into account certain features regarding the inclusion or non-inclusion of certain indicators.

The specified part of the profit of the controlled foreign company:

• Included in the total annual taxable income of an individual;
• Increases the object of taxation of corporate income tax.

Adjusted income of a controlled foreign company is not included in the total taxable income and does not increase the pre-tax financial result in some cases, for example, if the total combined income of all controlled foreign companies of one controlling person from all sources does not exceed the equivalent of 2 million euro at the end of the reporting period or a controlled foreign company is a public company whose shares (stakes) are traded on a recognized stock exchange. The basic rate of 18% is applied to such profit. (The norm is valid from 01.01.2021).
The controlling persons are obliged to submit a report on the controlled foreign companies to the controlling body simultaneously with the submission of the annual declaration of property and income or the tax return on corporate income tax for the relevant calendar year.

The law also introduces disciplinary liability for illegal refusal to provide individual tax advice.