The last spring day was marked by the fruitful work of the jubilee V International Forum “Transfer pricing and tax planning 2019”, which was held on May 31 in Kyiv.
For the fifth time, officials of the Ministry of Finance of Ukraine, SFS of Ukraine, the NBU, judges, domestic and foreign experts in transfer pricing, practitioners and auditors gathered to discuss the latest legislative innovations, problems, development prospects and practical aspects of work in the sphere of transfer pricing.
The event began with a welcoming word from the forum’s organizers. Larysa Vrublevska, partner, head of the transfer pricing practice, congratulated participants of the forum, noting the relevance of the transfer pricing issue and the activity of developing this practice in Ukraine. Yaroslav Romanchuk, Managing Partner of the EUCON Legal Group noted that during 5 years the forum has expanded its subject, adding the issue of international tax planning, as well as expanded its scope, attracting more and more experts every year.
First session “International tax trends and their impact on Ukrainian business. The results of the first five years of the transfer pricing rules in Ukraine. The transition from the period of adaptation to the period of effective functioning” began with a word from Nataliia Blazhivska, judge of the Supreme Court, President of the International Fiscal Association Ukraine, who, together with Yaroslav Romanchuk, became moderator of the discussion. So, Mrs. Blazhivska emphasized the importance of international tax law, the impact of BEPS and MLI on Ukrainian laws, and raised the issue of global trends and Ukrainian realities.
Kateryna Rozhkova the First Deputy Head of the National Bank of Ukraine, in turn, explained the aspects of financial sector reform, noting that the main aspect is the transparency of the banking system. So, Kateryna Rozhkova pointed out that financial stability is possible only for tax stability. The Law of Ukraine “On Currency and Currency Transactions” is a “capital-free visa” as Mrs. Rozhkova pointed out and she also added that without the implementation of the BEPS plan, we would not be able to provide financial and price stability.
Yevgen Kozlov, Senior Project Manager of the Reform Support Office under the Ministry of Finance of Ukraine, became a message deliver of the forum news, which was held the day before in Paris. So, the expert spoke about the issues that he discussed with foreign colleagues, in particular about “digital economy” – a number of digital giants that are developing at the expense of the number of users, as well as the potential for increasing tax revenues in the world, the work of the system of automatic exchange of tax information, on which information on 47 million bank accounts was transferred to 5 trillion. dollars.
Danylo Getmantsev, President of the Association of Tax Advisors, told the participants of the forum about risk management, new approaches to the post audit, the implementation of the principle “taxes shall be paid by everyone”, as well as the need to revise the institute of TP in Ukraine. The speaker also noted that there is a need to automate the process of resolving many issues for the unloading of the court.
Anatoliy Aleksandrov, Director of the Department for Strategic Development and International Cooperation of the State Fiscal Service of Ukraine, talked about changing the model of the economy, building a new policy and working system of the state with taxpayers. The main thing, according to the speaker, is the question of TP – construction of a new department, which will deal with TP issues and should focus on audit, administration and international co-operation.
Ruslan Lazarenko, GIZ International Finance Advisor for the German Society for International Cooperation, told about the cooperation of the German colleagues with the Ukrainians, particularly, about the organization of various measures for workers of the Ukrainian tax structures, cooperation with the state authorities, training of the relevant specialists and personnel reserve, holding trainings and seminars for employees of the system of bodies implementing the state tax and customs policy.
Tetiiana Korotka, Deputy Business Ombudsman in Ukraine, in turn, noted that the State Fiscal Service pays attention to each case on TP issues.
Grigol Katamadze, President of the Association of taxpayers of Ukraine, pointed out that the issues of a new Tax Code, development, providing of fundamental changes and reformation of tax system is urgent, and also emphasized on the need to stop the process of the reforming of the SFS before the election of a new parliament.
The discussion ended with a statement of Christodoulos Damiani, Eurofast Global CEO, board member of IFA Ukraine, who pointed out that Ukraine has undergone more changes over the past five years than did the previous years of independence, and has changed development vectors, motivation and philosophy. The speaker also stressed out that Ukraine and its internal changes are observed by other countries.
The second session of the forum was devoted to the issue “How will new mechanisms for combating tax evasion, money laundering and currency control affect the transfer pricing in Ukraine?” Iryna Tertyshnyk, chairman of the qualification commission, member of the Board of the Union of tax advisers of Ukraine, was the moderator of such session.
The session was started by Yevgen Stepaniuk, Head of the Financial Sector Reform Office of the Department of Strategy and Reform of the NBU, who told about the peculiarities of political instability and its impact on the economic situation in the country, problems of taxation of holding companies in low tax jurisdictions, pitfalls towards the adoption of the Law “On the implementation of the BEPS action Plan in Ukraine”, and noted that large business has been working on new rules for a long period of time.
Tetiiana Ostrikova, people’s deputy of Ukraine, member of the Verkhovna Rada Committee on Tax and Customs Policy, pointed out that there are currently no draft laws on BEPS and the introduction of a tax on withdrawn capital in the Verkhovna Rada. In turn, the speaker added that the issue of introducing the tax on withdrawn capital is an extremely important aspect in the context of the TP
Yevgeny Kozlov, Senior project manager of the Reform Support Office under the Ministry of Finance of Ukraine added to his previous statement that it was not possible to fully implement the BEPS plan, but there are some successes – above all, the ratification of the MLI.
Maxim Vasiuk, Head of the Department of Financial Investigations of the State Financial Monitoring Service of Ukraine, conducted an analysis of typical money laundering schemes, provided real examples of the functioning of these schemes, and also talked about the legislative measures to combat money laundering in the world.
Yaroslav Romanchuk finalized the second session and told about why Ukrainian companies use a foreign element in corporate structuring, named factors that should be taken into account when choosing a foreign jurisdiction. At the conclusion of the report, the speaker stressed that international corporate structuring today is an optimal, universal and profitable tool for protecting business from third parties.
Equator of the Event was the third session: “International experience of applying laws on transfer pricing and transparency of tax planning”, which was moderated by Oleksandr Kovtoniuk, INTAX GROUP, Managing Partner.
Christodoulos Damianu, CEO of Eurofast Global, board member of IFA Ukraine, conducted a detailed analysis of the Cyprus experience with European countries, and also talked about the experience of Bulgaria, Greece, Croatia and Bosnia, peculiarities of the work of the CRS system in Europe.
Mariia Ortynska, patent attorney of Ukraine, attorney-at-law, Managing Partner of the patent and law company IPStyle, talked about the functioning of IP-boxes. So, the speaker told about the purpose of IP-boxes, the issue of income from intellectual property, the relationship TP and intellectual law.
According to the speaker, IP-boxes in Cyprus are almost not used, but they are used in Poland with certain features. The speaker also stressed out that the main trend is almost complete cessation of the use of IP-boxes.
Oleksandr Semenishche, head of the department of inspections of non-resident representative offices of the Department of Audit of the Central Administration of the State Fiscal Service of Kyiv, told participants about the functioning and taxation of the representative offices, particularly, that the representatives can now consider their activities through the TP.
Eugenia Abrosimova, partner at the TP of “Audit-Invest” company, told participants in a practical example about the use of internal analogues.
The Fourth Session on the issue “Transfer Pricing Monitoring – The First Results of the Tax Authorities Inspection. The development of judicial practice” was moderated by Larysa Vrublevska, auditor, partner, manager of the transfer pricing practice of the EUCON Legal Group.
Susanna Mihonik, Head of Department of audit of separate objects and categories of payers of the Central Administration of the State Fiscal Service in Kyiv, told about detailed analysis by the controlling bodies, about inspection of SFS – the most popular inspections and their peculiarities, reasons for delaying inspections, preparing documentation for inspection, and self-adjusting the documentation.
Vyacheslav Krugliak, head of the transfer pricing audit department of the Audit Department of the SFS of Ukraine, focused on the problem of choosing the method, analyzed the nuances of introducing changes in forward contracts, analyzed changes in standards of TP in Ukraine and outlined the world experience.
Iryna Dudka, Head of the Transfer Pricing Audit Department, Office of Large Taxpayers of the SFS of Ukraine, analyzed and dismantled the practical cases of the first transfer pricing disputes – in the administrative and judicial disputes from the SFS position.
The last topic of the fourth session was represented by Volodymyr Bevza, attorney-at-law, deputy head of the tax practice of the EUCON Legal Group. So, the expert gave recommendations on teamwork, told about the price of taxpayer mistakes. The speaker said that judges in Ukraine are not ready for TP, namely judges of the first instance.
The last, fifth session was devoted to the consideration of practical issues regarding the preparation of documentation for the TP.
So, Larysa Vrublevska focused on the criteria of the quality of TP documentation, particularly, the speaker noted that the TP documentation should contain the information provided in clause 39.4.6 of the TC of Ukraine. “If the taxpayer has used the most appropriate method for establishing the compliance of the terms of the controlled transactions with the “arm’s length” principle, according to the criteria set forth in clause 29.3 of the TC of Ukraine, the same method is used during inspection by the controlling authority. If the substantiation of the terms of transaction is insufficient or inappropriate, the controlling authority has the right to prove this, applying other approaches”, stressed Larysa Vrublevska.
Zhanna Biloblovska, auditor, tax counselor of the EUCON Legal Group, completed the forum with an informative presentation, telling the audience about the criteria for choosing a party, requirements for the algorithm for the distribution of operating income and expenses, and introduced an algorithm for segmentation of financial reporting indicators and called factors that affect the level of segmentation.
In addition to interesting performances, productive discussions, active talks, communication and new acquaintances, there was a surprise for the forum participants from the sweet partner of the Event – “Kyiv БКК” company, namely the drawing of tasty novelties! So, the six lucky ones got cake after the results of the drawing, so the forum ended not only on the positive, but also on a sweet note!
The EUCON Legal Group does not stop there and promises to expand its limits, so expect to continue series of events on transfer pricing, follow the news on the website and company pages on social networks! To new appointments and new vertices!