Law of Ukraine

"On Amendments to the Tax Code of Ukraine to Improve Transfer Pricing"

Date of entry into force:
May 30, 2014

The Tax Code of Ukraine regulates relations arising in the sphere of levying of taxes and fees, in particular, determines an exhaustive list of taxes and fees levied in Ukraine, and the procedure for their administration, payers of taxes and fees, their rights and obligations, the competence of controlling authorities, the authority and obligations of their officials during tax control, and the liability for violating tax legislation (Article 1 of the Tax Code of Ukraine).

According to Article 14 of the Tax Code of Ukraine, transfer pricing is a system for determining the usual price of goods and/or results of works (services) in operations classified as controlled under Article 39 of the Tax Code of Ukraine.

Article 39 of the Tax Code of Ukraine regulates transfer pricing.

The Law amends Article 39 of the Tax Code of Ukraine, envisaging that, for the purposes of the Tax Code of Ukraine, the following, among others, are classified as controlled operations:
  • economic operations where one party is a non-resident which is registered in a state (on a territory) where the income tax (corporate tax) rate is 5 or more percentage points lower than in Ukraine, or which pays income tax (corporate tax) at a rate that is 5 or more percentage points lower than in Ukraine. The list of such states (territories) is approved by the Cabinet of Ministers of Ukraine. This list of states (territories), including their respective income tax (corporate tax) rates, is published annually by the central executive authority that provides for creation and implements state tax and customs policy, in its official published media and on its official website. Information about changes to such rates is published within three months after such change;
  • economic operations provided for in Article 39, sub-paragraphs 39.2.1.1 and 39.2.1.2 of the Tax Code of Ukraine are classified as controlled if the total of such operations carried out by a taxpayer with each counterpart equals or exceeds UAH 50 million (excluding the value-added tax) for the respective reporting calendar year.

Article 120 of the Tax Code of Ukraine establishes liability for failure to submit tax reporting, late submission of tax reporting, or failure to comply with the request to make changes to tax reporting.

According to amended Article 120, paragraph 120.3 of the Tax Code of Ukraine, a tax payer who fails to submit the report and/or mandatory documents about controlled operations carried out by them during the year to the central executive authority that provides for creation and implements state tax and customs policy, as per the requirements of Article 39, paragraph 39.4 of the Tax Code of Ukraine, shall be liable to pay a fine of:
  • 100 minimum wages established by law as of January 1 of the tax (reporting) year – in case of failure to submit a report of controlled operations;
  • 10 minimum wages established by law as of January 1 of the tax (reporting) year – in case of failure to submit documents determined in Article 39, paragraph 39.4, sub-paragraph 39.4.8 of the Tax Code of Ukraine.

Payment of such financial sanctions (fines) does not relieve the tax payer from the obligation to submit a report (declaration) of controlled operations and/or documents determined in Article 39, paragraph 39.4, sub-paragraph 39.4.8 of the Tax Code of Ukraine.

The Law also amends sub-section 10 of the Transitional Provisions of the Tax Code of Ukraine, according to which:
  • in the period between September 1, 2013 and December 31, 2014, the fines for errors in calculation of monetary obligations under Article 39 of the Tax Code of Ukraine shall amount to UAH 1 per error. In case of voluntary correction of tax liabilities for the purpose of transfer pricing, after application of Article 39 of the Tax Code of Ukraine, between September 1, 2013 and December 31, 2014, the fines envisaged by Article 50 of the Tax Code of Ukraine shall not be applied;
  • in 2014, the report of controlled operations between September 1, 2013 and December 31, 2013, submitted to the central executive authority that provides for creation and implements state tax and customs policy according to Article 39 of the Tax Code of Ukraine, shall be submitted before October 1, 2014.
Внимание! Информация устарела из-за того, что этот раздел временно не обновляется!


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