It has been more than three years since the adoption and entry into force of the new tax rules on transfer pricing for Ukrainian taxpayers. During that time the new rules were getting gradually applied in practice. State Fiscal Service of Ukraine conducts active explanatory work on various issues arising from the application of the new legislation on transfer pricing: conferences and round tables are held with the business community, letters and explanations are published, comments on the procedure of application of some paragraphs of Article 39 of the Tax Code of Ukraine are provided.
The developing process of the new transfer pricing rules was based on transfer pricing principles developed by the Organisation for Economic Cooperation and Development (OECD) and practical application of transfer pricing rules in a number of foreign countries. It should be noted that currently the Ukrainian fiscal authorities are actively sharing experiences with foreign colleagues in the framework of concluded agreements, and during international conferences and round tables on the application of transfer pricing rules, conducting tax audits and concluding pricing agreements.
Certainly, the development of Ukrainian legal framework on transfer pricing is considerably influenced by changes in approaches to certain issues concerning transfer pricing in the world practice. In particular, the innovation in the Transfer Pricing Guidelines and other OECD regulatory documents governing foundations of transfer pricing in OECD member countries draw close attention of Ukrainian fiscal authorities. At present, we can say that changes in the world practice are likely to introduce some changes in Ukrainian tax legislation in the future.
Moreover, at the beginning of 2013 the OECD published a plan for countering base erosion and profit shifting (BEPS). The report also contained certain ways to develop the international legal framework in order to reduce base erosion and tax cuts entering the state budget. These issues are discussed at meetings of heads of states and finance ministers and are the subject of many round table discussions organized by the Ukrainian fiscal authorities in order to share experience in the scope of application of the law on transfer pricing.
Despite the similarity of Ukrainian transfer pricing rules with the OECD Guidelines, the Ukrainian rules have a specific character, and in some cases radically differ from international practice. For that reason, taxpayers – international companies should pay close attention to how intra-group transfer pricing global policy terms meet the requirements of the Ukrainian tax legislation.
Law office “Voloshyn and Partners” experience
The law office “Voloshyn and Partners” hires professionals specializing in various issues of the application of transfer pricing provisions. Over the past few years, the employees of the law office “Voloshyn and Partners” have successfully implemented transfer pricing projects for enterprises of different branches.
How can we help?
The law office “Voloshyn and Partners” offers services in the field of transfer pricing that include:
- Assistance in preparing transfer pricing documentation substantiating used methodology and confirming the arm’s length and market level of current prices;
- Diagnostics of transfer pricing risks and guidelines on improving the existing pricing policy in the company, in particular by reorganising production and supply scheme, adjusting pricing approach;
- Substantiation of used methodology and correspondence of current prices to the market level;
- Advising on the structuring of intercompany operations based on the principle of comparability of prices to the market level, especially when transferring rights on intellectual property, and carrying out financial transactions;
- Assistance to international companies in adapting transfer pricing global policy with the requirements of the Ukrainian legislation. The development and promotion of trading and procurement structures;
- Recommendations on development of transfer pricing function in the company and procedures of effective cooperation between the relevant services of the company as part of work to comply with the provisions of transfer pricing;
- Advising on the development of transfer pricing methodology on services and cost allocation models;
- Development of business processes and systems of internal control for the purposes of compliance with transfer pricing policy;
- Assistance in adjusting disputes arising from tax audits on pricing.