Introduction of a single fiscal unit in Ukraine will simplify administration – Metinvest CFO

The introduction of a single fiscal unit model in Ukraine will make companies’ operations more transparent and reduce administration. This opinion was expressed by Yulia Dankova, Chief Financial Officer of Metinvest Group, at the XXII Annual Forum of CFOs of Ukraine held in Kyiv.

A single fiscal unit is a European and Anglo-Saxon model that provides for the registration of enterprises with a single corporate ownership with the tax service of a particular country. One group management company accounts for, registers, and pays the main taxes of the companies.

“This model enhances the transparency of a group’s operations and tax profile while significantly reducing the administrative burden for both the group’s enterprises and the state. It is the best possible solution for both business and the state as a whole,” Dankova said.

In her opinion, one of the provisions of the unit, which allows for offsetting the losses of one company with the profits of another in peacetime, will not cause any harm to the state. However, in times of war, this may cause some inconvenience, which can be regulated by transitional provisions.

Yulia Dankova emphasized the positive experience of applying the model of a single fiscal unit by Metinvest’s enterprises abroad, which works quickly and without complications for the company in the Netherlands, the United States, and the United Kingdom. It simplifies administration and makes the business completely transparent to the government.

“All enterprises are registered together and visible, allowing any question to be answered immediately,” she explained.

Yulia Dankova also commented on the prospects of introducing new regulation of intra-group transactions in Ukraine. She believes that the introduction of transfer pricing for transactions between residents of Ukraine and group companies is a wrong way to go, as its philosophy is to regulate transactions with different tax rates and different taxation systems.

“In Ukraine, enterprises that pay income tax should not be subject to such regulation. We already have a complex and stringent transfer pricing system compared with any other country. Extending it to cover transactions between enterprises within Ukraine would be excessive,” she said.

According to Metinvest’s CFO, if internal transfer pricing is introduced, it will increase the cost of tax administration, which is already difficult, add unnecessary paperwork and affect white taxpayers.

As GMK Center reported earlier, Metinvest, including its associates and joint ventures, increased its payments of taxes and duties to the budgets of all levels in Ukraine by 38% in January-September 2024, up to UAH 15.2 billion compared to the same period in 2023.