On 16 August 2019, the Ministry of Finance issued Order No. 345 providing guidelines on transfer pricing arrangements for transactions between non-residents and their representative offices and permanent establishments in Ukraine.
The Order addresses the question of whether a representative office obliged to submit a report on controlled transactions in case the amount of funds received from the non-resident for the maintenance of the representative office or for services rendered for the non-resident exceeds UAH 10 million. In such cases, the Order provides that operations of the non-resident representation which does not correspond to the signs of permanent establishment and which are carried out solely in the framework of activities that are preparatory or ancillary to such non-resident are not considered controlled. Therefore, it is not necessary to submit a report on controlled transactions to such a representation.
The Order also addresses the questions of whether funds received from a non-resident for the maintenance of a permanent establishment (such as for employee salary) or intended to be transferred to it for the benefit of residents for services rendered (works performed) to a non-resident are economic transactions for the purposes of transfer pricing. In such cases, the Order provides that such transactions are considered economic transactions and then fully taken into account in determining the value criterion for the volume of business transactions for the purposes of transfer pricing.
