Collective investment institutions (CIIs) were and remain a perfectly legal tool used by big business to optimize income tax. In order to prevent abuses in the tax sphere, the National Securities and Stock Market Commission (NSSCF) plans to change the CII reporting format. About this stated head of the commission Ruslan Magomedov.
“There is one topic that we are constantly criticized by the tax authorities, that asset management companies and investment funds did transactions not with joint investment money. We want to change the reporting so that it is clearly visible whether it is joint investment money or not.” Magomedov explained.
According to him, the initiative to change reporting is not negative, despite some rumors.
“Because there are rumors to remove this tax benefit for CII altogether, as if this is what our international partners demand.” – said the chairman of the commission.
In the context of comments from the tax authorities, he specified that the investment fund should be formed at the expense of the funds received from the sale of shares or share certificates, and these funds should be used for investment with subsequent exemption from income tax – until the profit is distributed.
“But many abused it and presented as CII assets what they really weren’t. This issue has remained relevant for many years.” Magomedov stressed.
Regarding the issue of the possibility of hiding the real beneficial owners through the structures of the ISI, the head of the NCCPFR stated that this is impossible.
“In this matter, the NCCPFR is a model. After the start of a full-scale war, the commission was the first to establish requirements for the disclosure of information about the ultimate beneficial owners who are sanctioned persons or related to the aggressor country in the corporate structures of professional participants.”, he emphasized.
According to Magomedov, the commission participates in the interdepartmental working group on sanctions, and has already proposed not only the National Bank, but also other licensing regulators to introduce mandatory disclosure of ultimate beneficiaries with a share of influence over 10%.
We will remind that in the materials of the International Monetary Fund based on the results of the seventh review of the extended financing program, it is stated that the current CII system in Ukraine has significant shortcomings due to tax benefits. According to the IMF, these problems can be solved by strengthening regulatory supervision and control.
In response, the Ukrainian side, in the updated memorandum on economic and financial policy, undertook to develop a road map to eliminate gaps in the CII system, based on international standards and in consultation with international financial organizations.
