Transfer pricing services

Since September 2013 there have been valid transfer pricing regulations, which were introduced by changes to the Tax Code of Ukraine.

Transfer pricing regulations established new procedure of applying usual prices for tax purposes, which is obligatory applied for controlled transactions.

Controlled transactions include transactions in the amount of 50 million UAH per year (excluding VAT)

1) with related parties residents

2) with related parties non-residents

3) with non-residents registered in countries with income tax rate (corporate tax) for 5 or more percentage points lower than in Ukraine

According to the Law on transfer pricing it is necessary to submit Report on controlled transactions before May 1 of the year following the reporting one.

The report for 2013 shall be submitted till October 01, 2014.

The risk lays in probable outflow of financial resources of the enterprises when application of the system of penalties and additional accrual of tax liabilities:

  • for non-submission of Report on controlled transactions - 100 minimum salaries, as determined by the law as at January 1 of the tax (reporting) year

  • for non-submission of documentation on TP - 10 minimum salaries, as determined by the law as at January 1 of the tax (reporting) year

  • additional accrual of tax liabilities. For example, when determining deviation of the price from usual for 1% with a minimum amount of controlled transactions, additional accrual of VAT shall amount to 100 thousand UAH, additional accrual of income tax - 95 thousand UAH (moreover, there is also foreseen standard charging of penalties and interest)

In order to avoid disputes with regulatory authorities audit company HLB Ukraine offers the following services on transfer pricing:

  • analysis of transactions with related parties and counterparties of low-tax jurisdictions

  • identification of controlled transactions

  • definition of the risks associated with transfer pricing

  • methodological assistance, consulting and preparation of Report on controlled transactions

  • analysis of compliance of enterprise prices with market range of prices and profitability

  • development of Regulations on transfer pricing and usage of usual prices and development of business processes

  • identification and evaluation of correctness of methods chosen for determination of usual price

  • consultations on changes in the structure of transactions to reduce risks associated with transfer pricing

  • training of specialists on transfer pricing issues

  • automation of filling of Report on controlled transactions and other processes in the field of transfer pricing

  • support of conclusion of the contract on price agreement

  • support of tax inspections of controlled transactions and disputes with tax authorities