Role of control among the preconditions for the taxation of controlled foreign companies’ profits in Ukraine

Methods. The results are obtained with the following methods: system approach – when considering the concept of controlled foreign companies as a holistic phenomenon that influences the formation of tax liabilities; analysis – when considering legislative provisions that define controlled foreign companies and characterize their individual elements (foreign company, Ukrainian resident – controlling person, control relations); comparative legal method – when comparing the provisions of Step 3 of the BEPS Plan and the provisions of the Tax Code of Ukraine on controlled foreign companies, as well as comparing different versions of the Tax Code of Ukraine; synthesis – when generalizing individual elements of control for further formation of practical conclusions. Results. There was analyzed the element of control as a key condition for recognizing a foreign company as controlled in the context of Ukrainian tax legislation. The legal and factual types of control used to establish the status of a controlled foreign company were examined in detail. It was established that Ukrainian legislation implements signs of legal control (through ownership share), factual control (through behavioral and organizational criteria), and partially economic control (through rights to receive profits and assets). Some inconsistencies in the provisions of the Tax Code of Ukraine were identified, in particular regarding different approaches to threshold values of ownership for establishing legal (and economic) control. There was emphasized the need to amend the current legislation to eliminate inconsistencies and prevent tax abuse. The importance of clear regulation of the signs of control for the purpose of effective taxation of profits from controlled transactions and prevention of tax evasion was emphasized. Novelty. The concept of control as a key prerequisite for recognizing a foreign legal entity as controlled under Ukrainian tax legislation has been comprehensively studied, taking into account international experience and the provisions of the BEPS Action Plan. For the first time, legal, factual, and economic control have been systematically analyzed as components of a comprehensive approach to determining control. Gaps and contradictions in the current legislation have been identified, and directions for its improvement have been proposed. Practical value. Recommendations have been developed to eliminate inconsistencies in Ukrainian tax legislation, which are designed to eliminate gaps in the criteria for establishing control of Ukrainian residents over foreign companies as a key prerequisite for the taxation of such companies' profits in Ukraine.