Ukraine does not belong to the OECD, and its tax authorities view the OECD Guidelines as advisory when applying tax regulations. Ukrainian transfer pricing rules differ from OECD Guidelines, covering transactions in low-tax jurisdictions, even if unaffiliated. They also introduce unique TP rules for certain commodities. The legal framework includes the Tax Code of Ukraine and specific Ministry of Finance Orders. The definition of related parties encompasses various criteria involving legal entities, individuals, loans, and financial aid. Ukraine has introduced a three-tiered transfer pricing documentation mechanism. Control foreign company (CFC) rules will apply from 2022, taxing profits of entities owned or controlled by Ukrainian tax residents. Advance Pricing Agreements (APAs) are available, and transfer pricing audits are conducted by tax authorities. Documentation must be in Ukrainian.
Ukraine is not a member of the OECD, and as of a 2017 letter from the Ukrainian Tax Authorities (UTA), the OECD Guidelines are seen as advisory for Article 39 of the Tax Code. Ukrainian transfer pricing rules differ from OECD standards, extending to transactions in low-tax jurisdictions, whether affiliated or not, and applying unique rules for specific commodities.
The legal framework comprises the Tax Code of Ukraine and various Ministry of Finance Orders, including Generalized Tax Consultations on Transfer Pricing. Amendments effective from 2020 introduce a three-tiered documentation mechanism.
Related parties in Ukraine include a wide range of criteria involving legal entities, individuals, loans, and financial aid. The definition is comprehensive and specifies various thresholds.
As of May 2020, Ukraine introduced BEPS Action 13, including country-by-country reporting, Master File, and Local File requirements for transfer pricing documentation.
Controlled foreign company (CFC) rules, effective from January 2022, may tax the profits of entities owned or controlled by Ukrainian tax residents. There are specific tax rates for individuals.
Ukraine offers unilateral, bilateral, and multilateral APAs for large domestic taxpayers with specific revenue and tax payment criteria.
Transfer pricing audits focus on notification, monitoring price deviations, report filing, and documentation compliance. Audits have a maximum duration and restrictions on multiple audits for one transaction within a year.
Detailed transfer pricing documentation is required, covering various aspects such as transaction information, economic analysis, and comparative analysis.
IC legal agreements are significant but take a back seat to the “conduct of parties” concept.
Resident businesses in Ukraine pay tax based on their worldwide earnings, with income adjustments indicated by financial statements.
The document outlines the various requirements for transfer pricing documentation, filing formats, deadlines, and mandatory language.
The Ministry of Finance approved a CbC reporting form in August 2021.
Taxpayers involved in controlled transactions must maintain transfer pricing documentation for each reporting period.
Penalties apply for taxpayers’ understatement of tax liabilities and for violating transfer pricing documentation rules.
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