President of Ukraine has signed the Law No. 609-VIII on 7 August 2015 regarding Amendments to the Tax Code of Ukraine (in respect of transfer pricing)” (the Law). The Law was officially published on August 10, 2015, and came into force from August 11, 2015. The Law introduces essential changes into present Ukrainian transfer pricing (TP) regulations.
The major changes introduced are the following:
- No TP regulations for VAT purposes and therefore they cannot be used for reassessment of VAT.
- The threshold for controlled transactions has been increased to UAH 5 million (approximately USD 230 thousand) with one counterparty, provided total annual revenue of the taxpayer exceeds UAH 50 million (approximately USD 2.3 million).
- Clarifies that transactions with non-residents from “low tax” jurisdictions may be qualified as controlled ones only from the date of inclusion of each respective jurisdiction into the List.
- Penalties for non-provision (late provision) of the report on controlled transactions have been increased to 300 times the statutory minimum monthly salary; penalties for non-inclusion of controlled transactions in the report have been reduced to 1% of the amount of the non-declared controlled transactions, but not more than 300 time the statutory minimum monthly salary.
- Re-opens the list of profit level indicators which may be used for determination of the level of profitability of controlled transactions.
- No 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).
The introduced amendments are aimed at bringing the Ukrainian transfer pricing regulations in line with international practice and the OECD guidelines.
