We remind you that since January 1, 2017, the amendments to the Article 39 of the Tax Code of Ukraine, which describes the transfer pricing, came into effect. They provided for the expansion of the list of non-residents, with whom the transactions will be controlled. So, according to the pp. “d” cl. 39.2.1.1 TCU the operations are recognized as controlling if they are performed with non-residents who do not pay income tax, including income earned outside the state of their registration, and / or are not tax residents of the country in which they are registered as legal entities. In order to administer this norm, the Cabinet of Ministers of Ukraine approved the list of organizational and legal forms of such non-residents in the context of jurisdictions with the Decree dated 04.07.2017 No.480. Most of the list is partnerships, among which are popular partnerships in Germany, the Netherlands, Switzerland, the United Kingdom and the United States.
The main criterion for assigning a business transaction with a non-resident counterparty to the controlled ones is the nonpayment of the corporate tax by the last one in the state of registration. Therefore, if this tax is paid by him in the reporting period and if the criteria specified in subparagraphs “a”, “b” and “c” of the above article do not meet, the transactions with him are not recognized as the controlled ones.
In connection with the topical innovations in the tax legislation on transfer pricing, the Ukrainian entrepreneurs engaged in the economic transactions with non-resident companies should take into account the country of registration and the organizational and legal form of the counterparty. In case if these data are present in the list approved by the Cabinet, it is necessary to prepare the documentation on the Transfer pricing which will allow to optimize the tax costs and avoid fines. The cabinet approved the list of organizational and legal forms of non-residents who do not pay corporate tax
We remind you that since January 1, 2017, the amendments to the Article 39 of the Tax Code of Ukraine, which describes the transfer pricing, came into effect. They provided for the expansion of the list of non-residents, with whom the transactions will be controlled. So, according to the pp. “d” cl. 39.2.1.1 TCU the operations are recognized as controlling if they are performed with non-residents who do not pay income tax, including income earned outside the state of their registration, and / or are not tax residents of the country in which they are registered as legal entities. In order to administer this norm, the Cabinet of Ministers of Ukraine approved the list of organizational and legal forms of such non-residents in the context of jurisdictions with the Decree dated 04.07.2017 No.480. Most of the list is partnerships, among which are popular partnerships in Germany, the Netherlands, Switzerland, the United Kingdom and the United States.
The main criterion for assigning a business transaction with a non-resident counterparty to the controlled ones is the nonpayment of the corporate tax by the last one in the state of registration. Therefore, if this tax is paid by him in the reporting period and if the criteria specified in subparagraphs “a”, “b” and “c” of the above article do not meet, the transactions with him are not recognized as the controlled ones.
In connection with the topical innovations in the tax legislation on transfer pricing, the Ukrainian entrepreneurs engaged in the economic transactions with non-resident companies should take into account the country of registration and the organizational and legal form of the counterparty. In case if these data are present in the list approved by the Cabinet, it is necessary to prepare the documentation on the Transfer pricing which will allow to optimize the tax costs and avoid fines.