On 9 April 2024, Larysa Vrublevska, Auditor, Partner at EUCON Legal Group, spoke at an online webinar for members of the Ukrainian Taxpayers Association on the topic of transfer pricing and taxation of CFCs.
In her speech, Ms Vrublevska touched upon the results of the 2022 reporting campaign, noting that 2.3 thousand business entities submitted reports on controlled transactions, noting that the number of taxpayers who submitted TP reports in 2022 remained approximately at the level of the pre-war period.
According to the results of 2022, the amount of independent adjustments in controlled transactions amounted to UAH 6.9 billion, while the amount of adjustments for 2021 was UAH 2 billion less (UAH 4.9 billion).
Ms Larysa elaborated on TP reporting, pointing out what reports should be obligatorily submitted and what may be requested by the tax authorities, namely Report on Controlled Transactions (to be submitted by 1 October following the reporting period); Annex TP to the income tax return (to be submitted if self-adjustments are made); TP documentation (to be submitted only at the request of the controlling authority); notification of participation in an international group of companies (to be submitted only by members of an IGC); global documentation (master file) prepared at the request of the IGC tax authorities; report by IGC countries (to be submitted by members of the group of companies by the end of 2024).
Larysa also mentioned the cases when global documentation (master file) may be requested, in particular: absence of payments of taxes in Ukraine and the use of IGC members registered in countries with preferential taxation systems in the supply chain; profitability indicators below the market level; the group has companies operating in jurisdictions outside its main markets; when intellectual property is separated from related activities within the group. The speaker also added that global documentation is usually prepared by parent companies.
Larysa Vrublevska focused on the issue of inventory of controlled transactions, emphasising which transactions should not be taken into account or should be taken into consideration in order to avoid cases of non-declaration, including the following transactions: paid dividends; assignment of claims/debt transfer; salaries; free transfer of goods; free financial assistance; repeated financial assistance, etc.
In her speech, Larysa discussed in detail the changes to TP reporting in 2024, focused on the preparation of income/expense justification, described the tax control, reporting and liability during martial law, and provided practical examples of reporting.