Taxes

11/ 08/ 2015

The Parliament of Ukraine has adopted a draft law that improves the current system of state regulation of transfer pricing (TP). For a long period of time the business community has been insisting on liberalization of rules on TP. Experts of the European Business Association systematically interacted with government representatives on the need for amendments to the current tax legislation that would bring it in line with the OECD Guidelines for TP and reduce pressure on business. Some changes to the expediency of which we have insisted, were embodied in the adopted Law: Excluding the possibility of using TP for the purposes of VAT charging; Increasing the threshold for declaring controlled operations: annual income threshold increased from UAH 20 million to UAH 50 million; volume of transactions with each counter-party increased from UAH 1 million to UAH 5 million; Softening the penalty for transactions that were not included in controlled operations reports: fixed maximum amount of the fine, which was previously unlimited - now 300 min. salaries; reduced the fine from 5% to 1% of the transactions that have not been declared in the report; Establishing the determination of the list of goods with stock quotes. The Association will continue to work away to improve the standards of tax laws in order to bring them into line with the best practices and to protect the legitimate interests of the member-companies of the Association. Legal background: On 15 July 2015 the draft law “On Amendments to the Tax Code of Ukraine (concerning the transfer pricing)” No1861 dd. 27 January 2015 was adopted by the Parliament of Ukraine. The law No. 609-19 was signed by the President of Ukraine 7 August 2015 and takes effect from the day following the day of its publication.

The Parliament of Ukraine has adopted a draft law that improves the current system of state regulation of transfer pricing (TP).

For a long period of time the business community has been insisting on liberalization of rules on TP. Experts of the European Business Association systematically interacted with government representatives on the need for amendments to the current tax legislation that would bring it in line with the OECD Guidelines for TP and reduce pressure on business.

Some changes to the expediency of which we have insisted, were embodied in the adopted Law:

Excluding the possibility of using TP for the purposes of VAT charging;
Increasing the threshold for declaring controlled operations:
- annual income threshold increased from UAH 20 million to UAH 50 million;
- volume of transactions with each counter-party increased from UAH 1 million to UAH 5 million;
Softening the penalty for transactions that were not included in controlled operations reports:
- fixed maximum amount of the fine, which was previously unlimited – now 300 min. salaries;
- reduced the fine from 5% to 1% of the transactions that have not been declared in the report;
Establishing the determination of the list of goods with stock quotes.

The Association will continue to work away to improve the standards of tax laws in order to bring them into line with the best practices and to protect the legitimate interests of the member-companies of the Association.

Legal background:

On 15 July 2015 the draft law “On Amendments to the Tax Code of Ukraine (concerning the transfer pricing)” No1861 dd. 27 January 2015 was adopted by the Parliament of Ukraine.

The law No. 609-19 was signed by the President of Ukraine 7 August 2015 and takes effect from the day following the day of its publication.

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