On 7 December 2017, the Ukrainian Parliament passed the Law of Ukraine “On Amendments to the Tax Code of Ukraine and Certain Laws of Ukraine on Securing Balance of Budget Revenues in 2018” No. 2245-VIII (“Law”). The law came into force on 1 January 2018.

 The most important changes in the area of transfer pricing are the following.

Transactions between a non-resident company and its Ukrainian permanent establishment (a branch that conducts business in Ukraine) valued at more than UAH 10 million shall be considered as controlled transactions for transfer pricing purposes. This change may affect primarily Ukrainian branches of foreign companies involved in major construction and infrastructure projects in Ukraine and receiving funds from their head offices.

The list of low-tax countries for transfer pricing purposes has been expanded by 19 new countries and territories, including Estonia, Latvia, Malta, Georgia, Hungary, United Arab Emirates, Singapore and others. The transactions of Ukrainian companies with counterparties registered or domiciled in the countries of the list are subject to special tax anti-avoidance restrictions and are considered to be controlled transactions.

The advance pricing agreement procedure has been updated. The APA can now be executed retroactively. If the taxpayer violates the APA, it ends from the date on which it entered into force. The extension of an APA is now possible.

The date from which the tax authorities may apply for transfer pricing documentation was changed from 1 May to 1 October of the year following the reporting year. This date now corresponds to the filing date of the annual transfer pricing notification (Report on Controlled Transactions).