Worldwide transfer pricing reference guide 2014

Ukraine
Taxing authority and tax law
Taxing authority: Ministry of Revenue and Duties of Ukraine is responsible for ensuring that taxpayers meet the requirements of the law.
Tax law: The Law of Ukraine №408-VII (4 July 2013) and Article 39 of the Ukrainian Tax Code 1 ; regulations adopted pursuant to the Law.
Relevant regulations and rulings
Article39 does not specify a number of fundamental procedures and data sources related to transfer pricing; but these are determined in
the subsequent laws and decrees (some of these are still being developed):
• Law of Ukraine № 657–VII (24 October 2013), amends the definition of “low tax jurisdictions,” i.e., countries where Corporate Income
Tax is 5 percentage points lower than that in Ukraine
• Decree of the Cabinet of Ministers of Ukraine №749 (2 October 2013), defines the percentage price range for specific goods in
accordance with Ukrainian Classification of Foreign Traded Goods for the purposes of transfer pricing
• Decree of the Cabinet of Ministers of Ukraine №763 (17 October 2013), defines the algorithm for the interquartile range calculation
• Decree of the Cabinet of Ministers of Ukraine №764 (17 October 2013), defines procedures and requirements for APAs between the tax
authorities and the taxpayer (bilateral and multilateral APAs are permissible). Timeframe for the review and signing of the APA and its
duration is not specified
• Order of the Cabinet of Ministers of Ukraine №865-p (23 October 2013), provides a list of specialized commercial sources of
information, which may be used for the purposes of transfer pricing
• Order of the Cabinet of Ministers of Ukraine №866-p (23 October 2013), provides a list of information sources containing data on
market prices, which may be used for the purposes of transfer pricing
• Draft order of the Cabinet of Ministers of Ukraine regulating the requirements for Controlled Transactions Report, developed by the
Ministry
The tax authorities provide their administrative interpretation and guidance with respect to the Law via the release of decrees, orders
and pronouncements at public conferences and events.
OECD guidelines treatment
Ukrainian Law follows the main standards of the OECD Guidelines. The array of methods and documentation requirements closely follow
the Guidelines.
The Law became effective on 1 September 2013, setting the first deadline for obligatory transfer pricing reporting (summary of
controlled transactions) on 1 May 2014, which is also the date when the first transfer pricing documentation may be requested.
Therefore, due to the limited time period since the Law came into force and absence of practical experience in Ukraine, tax audit
treatment of transfer pricing cases is uncertain.
Priorities/pricing methods
The transfer pricing Law includes five methods similar to those specified by the OECD Guidelines. The CUP method has the priority, while
use of the cost plus and Resale Minus methods may be complicated due to the lack of comparable accounting data. Profit-based transfer
pricing methods may be used without specific restrictions.
Transfer pricing penalties
A mandatory Controlled Transactions Report is due on 1 May every year following the close of the year. The penalty for not filing a
transfer pricing report is 5% of the total value of controlled transactions of the taxpayer during the reporting period.
Tax authorities may request transfer pricing documentation starting 1 May 2013 and the taxpayer has to submit it within one calendar
month from the date of request (two months in case of large taxpayers). The penalty for not filing the transfer pricing documentation is
100 minimum wages (approximately UAH115,000/USD14,300).
1 Further referred to as The Law or Article 39 and used interchangeably.
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