On 7 August 2015 the President of Ukraine has signed the Law №609-VIII "On Amendments to the Tax Code of Ukraine (in respect of transfer pricing)" (the Law), which was previously adopted by Ukrainian parliament. The Law became effective on 13 August 2015 and introduces essential changes into present Ukrainian transfer pricing (TP) regulations.
Particularly the Law introduces the following changes (non-exhaustive list):
- Abolishes application of TP regulations for VAT purposes and therefore they cannot be used for reassessment of VAT
- Clarifies that transactions with non-residents from a "low tax" jurisdictions (ie those listed in Resolution of the Cabinet of Ministers №449-р dated 14.05.2015 (the List)) may be qualified as controlled ones only from the date of inclusion of each respective jurisdiction into the List
- Changes special procedure of confirmation of arm's length prices for goods with stock quotes:
- now procedure applies to all controlled transactions with goods with stock quotes (previously it was applicable only to transactions of resident with non-residents from "low tax" jurisdictions)
- arm's length range of prices is now calculated according to standard procedure (i.e. established by Decree of the Cabinet of Ministers №381 dated 04.06.2015)
- the exact list of goods with stock quotes is now established by the Cabinet of Ministers (respective list is to be issued).
- Increases thresholds for qualification of transactions as controlled ones:
- annual income of a taxpayer must exceed UAH 50 million (used to be UAH 20 million)
- volume of respective transactions of a taxpayer must exceed UAH 5 mio (used to be UAH 1 million).
- Re-introduces the list of profit level indicators which may be used for determination of the level of profitability of controlled transactions
- Abolishes the requirement as to submission alongside with corporate profit tax declaration of information on performed controlled transactions
- Increases the term during which taxpayers can provide information on controlled transactions (on additional request of tax authorities) to 30 calendar days (previously was 10 days)
- Changes some penalties for violation of TP regulations:
- for non-submission of report on controlled transactions - 300 minimal salaries (used to be 100 minimal salaries)
- for non-reporting of a controlled transaction in the report on controlled transactions - 1% of the amount of such transaction however not more than 300 minimal salaries for all non-reported transactions (used to be 5% of non-reported transaction without any limit).
The Law clarifies that the introduced changes are to be taken into account while preparing report on controlled transactions and respective TP documentation in relation to transactions performed within 2015.