Annual reporting and changes for 2021: Larysa Vrublevska, Auditor, Partner and Head of Transfer Pricing Practice talked to the audience of webinar on January 28, and explained how to deal with transfer pricing in respect to the results of the year 2020. In particular, the listeners heard relevant information on the recommended algorithm of actions at the end of the reporting period; about control and audit within quarantine conditions, new rules, new reporting, terms of entry into force of innovations, business purpose in transfer pricing, hidden dividends etc.
During her speech the expert focused on the amendments introduced to the Law 466-ІХ concerning three-level Transfer Pricing documentation. She informed the audience that according to the said changes now we have the three-level documentation consisting of Transfer Pricing documents (local file), global documents on Transfer Pricing (master file) (for a certain category of taxpayers) and country-by-country reporting (under certain conditions).
Larysa Vrublevska explained in more details what companies are to use the three-level documentation. In particular, local documentation must be prepared by all taxpayers, residents of Ukraine, who have controlled transactions. Global documentation (master file) and country-by-country reporting are to be submitted by those taxpayers that are a part of an international group of companies and meet the cost criterion. For global documentation, the total annual revenue should be of at least € 50 million, and the country report should be a consolidated group revenue of at least € 750 million.
The lecturer also considered in detail all the changes in the Transfer Pricing for 2020, namely: extension of the List No.480 with the new institutional-legal form; new criteria for recognizing persons related (threshold for recognition of persons related 25%, without legal entity status); new types of controlled business transactions; additional methodology for intangible asset transactions and restructuring transactions (according to National or International Valuation Standards); rules for commodity transactions; changes in reasonable economic cause (business purpose) (cl. 140.5.15 of the TCU); taxation (15%) of constructive dividends since 2021 (cl. 14.1.49 of the TCU) and expansion of the list of transactions for 30% adjustments (cl. 140.5.5-1 of the TCU) and other.