Transfer pricing: application of special rules according to Transitional provisions of the Tax Code of Ukraine
The provisions of para. 21. of Chapter XX “Transitional Provisions” of the Tax Code of Ukraine (hereinafter - "the TC of Ukraine") envisage a special order (applicable till January 1, 2018) of determination of arm’s length prices for the purpose of taxation of import/export transactions of the following commodity items:
p
- 1001 – 1008 according to Ukrainian classification of goods in foreign economic activity (UKTZED) (grain crops: wheat, barley, oats, rye, rice, buckwheat, sorghum);
- 1501 – 1522 according to UKTZED (Fats and oils of animal or plant origin; their cleavage products, prepared edible fats, waxes of animal or plant origin);
- 2601 – 2621 according to UKTZED (Ores, slag and ash);
- 2701 - 2716 according to UKTZED (Mineral fuel, oil and products of their distillation; bituminous substances, mineral waxes);
- 2801 - 2853 according to UKTZED (Inorganic chemicals, inorganic or organic compounds of precious metals, of rare earth metals, of radioactive elements or isotopes);
- 2901 - 2942 according to UKTZED (Organic chemicals);
- 7201 - 7229 according to UKTZED (Ferrous metals) and 7301 - 7326 according to UKTZED (Ferrous metal products).
As regards special methods, the wording of the mentioned transitional provisions is extremely unclear. Thus, from the literal wording of transitional provisions it follows that a taxpayer can use one of several methods.
First of such “methods” implies that an arm’s length price is determined for every commodity item at the price level:
- reduced not less than by 5% - in case of sale of goods;
- increased not more than by 5% - in case of purchase of goods.
However it is not clear, for which price this “deviation” of 5% should be applied. Price of agreement or some other price?
Full text is open only for clients and subscribers of WTS Consulting, LLC.
SIMILAR POSTS
Ukraine Ministry of Finance clarifies general tax consultation on deemed dividends
Ministry of Finance of Ukraine clarifies some TP issues
Ukraine’s new transfer pricing rules expand taxpayer obligations
Another reincarnation of the special TP rules regarding raw materials. Will it work this time?
Global Trend: Operations with Raw Materials and Traditional Hard Industrial Products as a target of TP
Parallel Import: Hidden Tax Risks for Official Importers in the context of Transfer Pricing rules
The spirit of the international community of TP professionals
Impressions of participation in the Global Transfer Pricing Forum in Munich under the auspices of the International Tax Review
WTS Global Country TP Guide:
A comprehensive survey on Transfer Pricing from 73 countries
Bulgaria is excluded from the list of “low tax” jurisdictions for TP purposes
Transfer Pricing penalties: is it OK to apply penalty for the late submission of the report on controlled transactions for the period before January 01, 2017?
Transfer pricing penalties: general overview
The list of “low-tax” jurisdictions, adopted by the Cabinet of Ministers of Ukraine for transfer pricing purposes, was amended