Ukraine Introduces Exit Tax for Assets Abroad

The Cabinet of Ministers has approved a draft law introducing an "exit tax" for businesses when moving assets outside Ukraine. The changes will take effect on January 1, 2028, if passed by parliament. The tax will apply when Ukraine loses the right to tax the capital gains of assets due to their relocation abroad, including the transfer of assets to a permanent establishment abroad or a change in tax residency. The taxpayer will be required to increase the financial result by the difference between the market value of the asset and its taxable value. Exceptions include the temporary relocation of assets for up to 12 months and the transfer of assets between the taxpayer and its subsidiary. The draft law also introduces a general anti-abuse rule that allows for disregarding the tax consequences of transactions lacking valid commercial reasons. The controlling authority will need to prove the fact of abuse. The new rules also address hybrid mismatches, preventing double counting of expenses. Data on asset relocations will be reflected in the regular corporate income tax declaration. The changes aim to implement the European ATAD Directive.