EBA Expert Talks on Tax changes. Episode 2

15/ 07/ 2020

The EBA WUO Tax Committee continues the series of meetings about the Law of Ukraine “On Amendments to the Tax Code of Ukraine to improve tax administration, eliminate technical and logical inconsistencies in tax legislation” №466-IX (hereinafter the “Law”) which came into force on May 23, 2020. On July 15, 2020 within the online expert discussion, the invited experts Olena Voznyuk and Yuriy Repeta shared their understanding of сhanges in the rules of Transfer Pricing, taxation of non-residents as well as changes in the mutual dispute resolution procedure (MAP) and exchange of tax information. Yuriy Repeta, Lawyer of The First Chair Legal noted that non-residents, who operate in Ukraine without registration of legal entity, are recommended to review their activities for “commercial/non-commercial” and weather such activities meet the criteria of the permanent establishments (the list of which has been expanded). The stimulus for this is significant changes in the taxation of permanent establishments as well as the ability of regulatory authorities to check and register them without the application from non-resident. Considering global transparency, it persistently knocks on Ukraine’s doors, since the time the changes to the legislation on restricting of bank secrecy and disclosing of such information to the State Tax Service, have been adopted. The signing of CRS MCAA and the beginning of the actual exchange of “tax” information are expected. Olena Voznyuk, Partner of Nexia DK. Auditors & Consultants, noted that it’s a must for controlled transactions to have a business purpose which has to be justified in the TP documentation. The transfer of functions and risks within a group is a separate controlled operation that must be justified for the TP purpose. Its necessary to prepare for the submission of three-level documentation on TP + notification of participation in an international group of companies. In case the company has transactions with stock commodities/raw materials, it’s important to pay attention to changes in their regulation for TP purpose. On behalf of the meeting participants, we express our gratitude to Igor Pikhurko, Head of the Tax Committee of the EBA Western Ukrainian office, for professional moderation of the meeting, and to Olena Voznyuk and Yuriy Repeta for provided qualified information on changes in current tax legislation.

On July 15, 2020 within the online expert discussion, the invited experts Olena Voznyuk and Yuriy Repeta shared their understanding of сhanges in the rules of Transfer Pricing, taxation of non-residents as well as changes in the mutual dispute resolution procedure (MAP) and exchange of tax information.

Yuriy Repeta, Lawyer of The First Chair Legal noted that non-residents, who operate in Ukraine without registration of legal entity, are recommended to review their activities for “commercial/non-commercial” and weather such activities meet the criteria of the permanent establishments (the list of which has been expanded). The stimulus for this is significant changes in the taxation of permanent establishments as well as the ability of regulatory authorities to check and register them without the application from non-resident.

Considering global transparency, it persistently knocks on Ukraine’s doors, since the time the changes to the legislation on restricting of bank secrecy and disclosing of such information to the State Tax Service, have been adopted. The signing of CRS MCAA and the beginning of the actual exchange of “tax” information are expected.

Olena Voznyuk, Partner of Nexia DK. Auditors & Consultants, noted that it’s a must for controlled transactions to have a business purpose which has to be justified in the TP documentation. The transfer of functions and risks within a group is a separate controlled operation that must be justified for the TP purpose. Its necessary to prepare for the submission of three-level documentation on TP + notification of participation in an international group of companies. In case the company has transactions with stock commodities/raw materials, it’s important to pay attention to changes in their regulation for TP purpose.

On behalf of the meeting participants, we express our gratitude to Igor Pikhurko, Head of the Tax Committee of the EBA Western Ukrainian office, for professional moderation of the meeting, and to Olena Voznyuk and Yuriy Repeta for provided qualified information on changes in current tax legislation.