The active work have started in the format of working groups to prepare Ukraine’s legislative and administrative framework in the field of taxation and tax administration for EU accession

The Ministry of Finance of Ukraine, the State Tax Service of Ukraine and the EU Public Finance Management Support Programme in Ukraine (EU4PFM) have started active work in the format of working groups on the preparation of the legislative framework in the field of taxation and tax administration, necessary for joining the European Union.

Each provision of an EU legal act must be properly implemented in the national legislation of each EU member state, ensuring the same application of those tax provisions that are harmonized at the EU level.

EU tax policy includes two components: direct taxation, which remains the sole responsibility of Member States, and indirect taxation, which affects the free movement of goods and the freedom to provide services in a single market.

Lyudmila Palamar, Director of the Department of International Taxation of the Ministry of Finance of Ukraine, noted: “The priority direction in the direct taxation component for us is the implementation of the Directives in the field of combating tax evasion (ATAD 1 and ATAD 2). This work involves the introduction of new tools (in particular, the general rule for combating tax evasion (GAAR), anti-hybrid rules (hybrid mismatch)), which will allow more effective combating of tax evasion in Ukraine. As part of the implementation of the Association Agreement, Ukraine has made significant progress in the approximation of legislation in the field of value added tax and excise tax with EU legislation.”

“It is important that work on alignment of VAT and Excise legal acts started in 2023, given the scope of the EU regulatory framework and the necessary IT solutions for these taxes,” emphasized Paulius Majauskas, EU4PFM key international expert on tax. Although progress has been made in this field according to the Association Agreement provisions, the latter does not cover requirements applicable to the countries as EU Member States.

According to Paulius Majauskas, the development of legislation to implement the provisions of the ATAD 1 and ATAD 2 Directives can be carried out as early as 2023, which would allow to focus on the next steps in the euro integration process.

For the implementation of the EU Directives, the priority of their implementation in Ukraine has already been considered, and their review and comparative analysis of the compliance of Ukrainian tax legislation with the provisions of the EU Directives are being carried out.

Moving towards our European future together!