Contribution of fixed assets to the share capital of an Ukrainian company is treated as a controlled transaction for transfer pricing purposes. On 9 March 2017, the State Fiscal Service (SFS) clarified this through issuing Guidance Letter No. 5898/7/99-99-14-01-02-17.
Any commercial transaction would be treated as controlled transaction that affects the taxpayer’s taxable base. The letter clarified that the contribution of fixed assets to the share capital of the company does not affect the company’s taxable base in the period when the contribution is performed; such fixed assets are subject to depreciation deductions starting from the month following that in which they are put into business use.
Consequently, the contribution of fixed assets to the share capital of the Ukrainian company should be included in the Report on the Controlled Operations, provided that the general criteria of controlled transactions are satisfied.
