TAX ALERT 19.05.2026 | Digest of Key Tax News

Tax changes are planned in connection with the repeal of the Commercial Code 

On May 7, 2026 the Ministry of Finance of Ukraine published a draft Law of Ukraine “On Amendments to the Tax Code of Ukraine to Bring It into Compliance with Law of Ukraine No. 4196-IX of January 9, 2025 “On the Specifics of Regulating the Activities of Legal Entities of Certain Organizational and Legal Forms During the Transition Period and Associations of Legal Entities”.

Among the key changes proposed by the draft law are:

• updating the definitions of organizational and legal forms of legal entities in accordance with the provisions of the Civil Code of Ukraine;
• clarification of the term “non-business partnerships, institutions, and organizations”;
• establishment of a six-month period for non-profit organizations to bring their founding documents into compliance with legal requirements;
• amendment of the provisions of the Tax Code related to the payment of dividends by state-owned enterprises following the repeal of the Commercial Code of Ukraine;
•  definition of the term “separate divisions” for personal income tax purposes and clarification of the procedure for such divisions to pay tax to the relevant local budgets;
• updating the list of non-business partnerships, institutions, and organizations.

The law is expected to take effect on January 1, 2027 with the exception of certain provisions that will take effect the day after its official publication.

Changes are planned to the reporting forms for CFCs and controlled transactions

On May 5, 2026, the Ministry of Finance of Ukraine published:

• draft order “On Approval of Amendments to the Form of the Report on Controlled Foreign Companies, the Form of the Abbreviated Report on Controlled Foreign Companies, the Procedure for Completing the Report on Controlled Foreign Companies, the Abbreviated Form of the Report on Controlled Foreign Companies, and Submission to the Controlling Authority”;
• draft order “On Amendments to the Form of the Report on Controlled Transactions and the Procedure for Preparing the Report on Controlled Transactions”. 

The purpose of these changes is to align tax reporting with Law of Ukraine No. 3813-IX, which, in particular, introduced new criteria for monitoring transactions during martial law.

Consequently, among the changes proposed by the draft orders are:

• the addition of new financial criteria for related party relationships to the reporting requirements, based on the proportion of revenue or the value of goods purchased in transactions with non-residents, namely:
• affiliation code “525” – applies if revenue received from a single non-resident constitutes 75% or more of total revenue from all non-residents and 50% or more of the resident’s total income;
• affiliation code “526” – applies if purchases of goods from a single non-resident account for 75% or more of all purchases from non-residents and 50% or more of the resident’s total purchases.
• updates to CFC reporting, specifically by detailing transactions with certain categories of non-residents: related parties; non-residents registered in countries (territories) included in the Cabinet of Ministers’ list; non-residents whose legal form is included in the relevant Cabinet of Ministers’ list.

Changes to the income tax return form have come into effect  

On May 8, 2026, order No. 186 of the Ministry of Finance of Ukraine “On Amendments to the Corporate Income Tax Return Form” dated April 6, 2026, entered into force; we wrote about the draft of this order earlier.

We remind you that the changes it introduces to the corporate income tax return form relate to updated rules for the taxation of banks, certain aspects of the approval of the tax relief directory, as well as specific indicators of the maximum amount of the minimum tax liability regarding land plots.

Procedure for exchanging electronic documents with tax authorities updated

On May 24, 2026, the order of the Ministry of Finance of Ukraine “On Amendments to the Procedure for Exchanging Electronic Documents with Regulatory Authorities” is expected to take effect.

We wrote earlier about the changes introduced by this document. In particular, it is envisaged that:

• individuals are automatically considered participants in electronic document circulation and submit electronic documents using a QES / UES;
• managers and self-employed individuals are required to sign electronic documents with their own digital signature, information about which is submitted to the tax authority;
• the delegation of signing authority to other persons is carried out by submitting a corresponding notification to the tax authority in electronic form.

The Supreme Court has provided clarification regarding the tax-free liquidation of a CFC

The Administrative Court of Cassation within the Supreme Court, in its ruling dated May 7, 2026, in Case No. 320/27070/24, clarified the nature of investment income for the purposes of tax-free liquidation of a CFC.

According to the facts of the case, the plaintiff, who was the sole shareholder of LTD, acquired a 100% stake in the authorized capital of a Ukrainian LLC from a Cypriot company in 2021 for $6.45 million. In connection with the conclusion of the agreement, she incurred an obligation to pay the corresponding amount to the seller of the corporate rights.

Subsequently, as a result of a series of transactions involving the assignment of the right of claim, as well as the payment of dividends, the right of claim under the aforementioned obligation was transferred to the company LTD, which is owned by the plaintiff. In December 2021, the aforementioned company was liquidated using the tax-free liquidation mechanism, and the plaintiff, as its sole shareholder, received, as part of the liquidation estate, a claim against itself in the amount of $6.45 million.

As a result, the debtor and creditor merged into a single entity in accordance with Article 606 of the Civil Code of Ukraine, which led to the termination of the obligation without an actual transfer of funds in foreign currency.

The tax authority interpreted these circumstances as an absence of actual expenses incurred for the acquisition of the investment asset, citing the fact that the plaintiff’s assets had not decreased by the amount of the acquired share’s value. On this basis, the tax authority assessed significant tax liabilities.

At the same time, the plaintiff noted that the proper documentary evidence of the expenses incurred was the purchase and sale agreement for a 100% stake in the LLC’s charter capital and the act of acceptance and transfer of the stake, which were provided to the tax authority and contained a clear definition of the amount of expenses related to the acquisition of the investment asset.

However, the tax authority did not accept the plaintiff’s approach.

Based on the results of the documentary audit, the tax authority concluded that the plaintiff had violated the requirements of the Tax Code of Ukraine. In particular, the tax authority pointed to the understatement of income in the form of investment profit, which, in the opinion of the State Tax Service, led to the non-payment of personal income tax for 2021 in the amount of over UAH 31.6 million, as well as to the non-accrual and non-payment of the military levy in the amount of over UAH 2.6 million.

The Supreme Court’s Position

The Supreme Court, sitting as a panel of judges of the Administrative Court of Cassation, upheld the decisions of the lower courts in favor of the taxpayer, based on the following conclusions.

The court noted that the rules for determining investment income do not contain an exhaustive list of documents to confirm expenses and do not establish an obligation to provide payment documents specifically. The purchase and sale agreement and the share transfer and acceptance certificate, which specify the price, constitute sufficient documentary evidence of the asset’s value.

The Supreme Court effectively rejected the approach under which only the actual payment of funds is recognized as documentary evidence of expenses.

This means that investment expenses may be substantiated by other legal mechanisms, including the set-off of counterclaims, the assignment of a claim, or the merger of the debtor and creditor into a single entity.

The decision also confirms the admissibility of using intra-group obligations in corporate structures during the liquidation of foreign companies.

At the same time, the court emphasized the importance of proper documentation of such transactions. In this case, the plaintiff submitted translated and apostilled documents from the foreign company, including the liquidation resolution, relevant certificates, and financial statements.