At the invitation of the Cherkasy Chamber of Commerce and Industry experts, EUCON Legal Group experts took part in a seminar devoted to topical issues and the latest legislative changes in the area of the transfer pricing. The event was held on August 22, 2018 in Cherkasy and was organized by the Cherkasy Chamber of Commerce and Industry.
As part of the presentation of Larysa Vrublevska, auditor, partner, manager of the transfer pricing practice in the EUCON Legal Group, participants of the Event discussed the peculiarities of the application of transfer pricing rules and received advice on the preparation of transfer pricing reporting. The speaker provided an algorithm for the preparation of reports and documentation on controlled operations, provided practical examples of the calculation of the cost criterion and drew attention to the most common mistakes of taxpayers in the preparation of reporting, outlining the basic requirements for qualitative documentation.
The second part of the report of Larysa Vrublevska was devoted to practical examples of justification of the level of prices in operations of import of goods from non-resident and examples of justification of the choice of the method of establishing the conformity of operating conditions with the principle of “arm’s length”.
Summarizing report, Larysa Vrublevska stressed out that only timely preparation of high-quality documentation would be able to protect the taxpayer from the claims of the controlling bodies.
Volodymyr Bevza, Attorney-at-law, Senior Associate, Deputy Head of Tax Practice, EUCON Legal Group, talked about inspections of controlled transactions and liability of taxpayers for violations of the laws in the area of transfer pricing.
Particularly, the speaker dwelt in detail on the factors and criteria for monitoring SFS of Ukraine, including the following: loss-making for several periods; mismatch of financial results (profitability indicators, profit / loss dynamics) by industry average; significant volume of intra-group services provision / receipt; paid royalties and / or interest on financial borrowings; conducting business operations of non-typical for the current activity of the payer, etc.
Volodymyr described the categories of tax disputes that arose as a result of inspections of controlled transactions and compliance with TP rules, informed about risks in transactions with “formally” related persons, and also in detail, using practical examples, described the liability of taxpayers for violations of the laws in the branch of transfer pricing.
At the conclusion of the report, the speaker drew the attention of participants to the letter of the SFS of Ukraine dated July 20, 2017 “On failure to submit transfer pricing documentation”, which stated that in case the postal service can not submit a request for submission of transfer pricing documents to the taxpayer in the absence of officials by location or refusal to obtain a request, failure to establish the actual location of the taxpayer or for other reasons, then such a request is deemed to have been served on the day indicated by the postal service in the notification of delivery (indicating the reasons for failure to effect service). “And if the taxpayer does not prepare the documentation within 30 calendar days from the date indicated by the postal service in the notification of delivery, the penal sanctions will be imposed on the taxpayer”, – mentioned Volodymyr Bevza.
