As part of the round table discussion on the topic “Trends in International Taxation: Conclusions for Ukraine“, which was held in Kyiv on the premises of UNIAN on June 10, 2016, the issue of requirements for transfer pricing documentation was discussed. Report on the subject was presented by Larysa Vrublevska, Partner, Head of Transfer Pricing at EUCON International Legal Center, Auditor, Head of the Transfer Pricing Committee of the Tax Advisers Association.
“The main priority of the Ukrainian government is to increase the investment attractiveness of economy and to counteract tax evasion. Therefore, the implementation of the BEPS Plan’s Action 13, which involves the construction of a three-tier reporting structure, namely “country-by-country”, “master file”, “local file” is important. A consolidated country-by-country report is provided by the parent company of a MNE group, provided that the report is submitted only if the group’s total revenue is at least EUR 750 million per year. The “Master file” is also prepared and submitted by the parent company in its jurisdiction with the possibility of further automatic exchange of information with other countries. “Local file” is provided by units of groups in their jurisdictions”, – noted Larysa Vrublevska.
Larysa Vrublevska informed that today more than 20 countries of the world had already implemented or drafted bills on the introduction of the the BEPS plan’s Action 13 in their tax legislation. She also emphasized that many countries had already joined the multilateral tax information exchange agreement, which includes the submission of a unified country-by-country report, measures to ensure confidentiality of information, as well as consultations between the competent authorities of the countries concerned.
In general, the application of the three-tier reporting structure can lead to discovery of a fact that individual companies generate profits that are not commensurate with the contribution of each jurisdiction in the value added chain, thus the controlling authorities will be able to check the entire supply chain and creation of the added value.
Larysa alsoe xplained what kind of information such reports should contain, what non-standard reporting cases may occur and what sanctions in the case of non-submission of reports can be applied.
Summarizing her presentation, Larysa emphasized that we should be prepared for Ukraine’s accession to the multilateral agreement on the automatic exchange of tax information, and that is why companies belonging to groups of multinational enterprises should think about collecting information in accordance with the new requirements.
Video of Larysa Vrublevska’s presentation:
https://www.youtube.com/watch?v=rZyzwzea_k8&