News
08.07.2013
Parliament passes law on transfer pricing
The Verkhovna Rada, Ukraines parliament, on July 4, 2013 approved a bill "On amendments to the Tax Code of Ukraine on transfer pricing" (No. 2515): a total of 321 MPs supported the bill, with 226 votes required for approval.
The Income and Tax Ministry initially expected that the adoption of the law could attract UAH 20 billion within three years, and the ministry managed to defend almost all the main clauses of the document.
The requirement for the monitoring of internal transactions, which was criticized by the profile parliamentary committee, was retained in the document. The lawmakers only managed to narrow the supervision to the companies, which do not make profits or are entitled with tax benefits.
The law foresees control over transfer pricing in transactions with residents of all countries where the profit tax (corporate tax) is five and more percentage notches lower than in Ukraine, and not only with residents of offshore countries as most lawmakers had proposed.
The document says that transactions worth over UAH 50 million a year is to be supervised by tax agencies. The definition of affiliated persons, which many lawmakers attacked for the extra broadness and unclearness, was retained.
The main legal department of the parliament tiled at the bill drawn up for second reading.
However, attempts to cancel control over internal transactions, to narrow the affiliated persons notion were rejected.
Communists achieved the removal of a clause on taxation of profits of lottery operators from the document.
As reported, for comparing prices in the transactions that are not under control, it is proposed that the range of market prices or a range of market margins will be set depending on the selected method of price definition in transactions under control. The price can be set using five methods, including the comparative uncontrolled pricing, reselling pricing, markup pricing and net profit.
In addition, a report on the extended analysis of the elements in controlled and comparable transactions, which could influence the commercial and/or financial conditions of the controlled transactions, will be submitted. The rules are to be applied during defining tax liabilities for value added tax and profit tax of companies.
If the president signs the law, the document can take effect from September 1, 2013.
