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The Draft Law on Amendments to the Tax Code of Ukraine on transfer pricing (for preview)

01 August, 2013 Documents of the state authorities

We bring to your attention the text of the draft Law of Ukraine “On amendments to the Tax Code of Ukraine on transfer pricing” in the version submitted for the second reading (which also became the last), and a transcript protocol of the session of the Verkhovna Rada of Ukraine (the transcript of the session can be found by the link) with a discussion regarding changes to the draft law and its adoption.

Basically, these documents together shall provide a clear picture of the final text of the law. How much the official text after signing would match this picture is a separate issue. Perhaps, there will be also something that was not adopted by the Verkhovna Rada.

It is interesting to note that during the session of the Verkhovna Rada of Ukraine one of the deputies remarked that violation of procedural norms during the adoption of the draft law took place. For example, during the session Agafonova N.V. said (according to the transcript):

“… a statement in the procedure of Article 48 on violation of the Rules of Procedure, I’m sorry, by you. You are considering draft laws in the second reading without discussion, without a report – this is regarding the 2341a and 2847 draft laws.And you know … that in the future this may lead to the cancellation of these laws. … I would still insist on following the norms of the Rules of Procedure and giving the right to speak not only to those whose proposals have been rejected, but also on bringing them upfor a confirmation if they were taken into account“.

From our side we may notice: why not? Especially if the final text includes something “from nowhere”.

We would like to remind that violation of Rules of procedure was sufficient for the Constitutional Court of Ukraine to cancel the amendments to the Constitution of Ukraine, despite of their prolonged use. This addresses to the decision No. 20-rp/2010 of 30.09.2010 in the case of compliance with a procedure of amending to the Constitution of Ukraine1  the case about the “reverse” of the constitutional reform, which received the great publicity.

Thus, the Constitutional Court of Ukraine declared unconstitutional the Law of Ukraine “On Amendments to the Constitution of Ukraine” dated December 8, 2004 No. 2222-IV (hereinafter  the “Law No. 2222”) “due to the violation of the constitutional procedure during its consideration and adoption”.

Recognizing the law No. 2222 unconstitutional, the Constitutional Court was guided by the fact that in course of its adoption the procedure of consideration, adoption and entering into force was violated. Particularly, the Constitutional Court noted that:

“Thus, the Verkhovna Rada of Ukraine adopted the Law No. 2222 without complying with the procedures established by the Constitution of Ukraine for its consideration and adoption, therefore, it violated the provisions of part two of Article 6, part two of Article 19, paragraph 1 part 1 of Article 85, Article 159”.

We also note that on July 5, 2013 the Deputies of Ukraine Makhnitskii O.I., Petrenko P.D. and Karpuntsov V.V. submitted the Draft Ruling on cancellation of the decision of the Verkhovna Rada of Ukraine on adoption in second reading and in general the draft Law on Amendments to the Tax Code of Ukraine regarding transfer pricing (No. 2515) dated July 4, 2013. In the explanatory note the Deputies refer to the flagrant violation of the Constitution and the provisions of the Rules of Procedure of the Verkhovna Rada of Ukraine.

Download pdf-file the text of the Draft Law in Ukrainian (221,0 Kb)

Download pdf-file the transcript of the session of the Verkhovna Rada of Ukraine in Ukrainian (407,0 Kb)

Footnotes:

1The resolution of the Constitutional Court of Ukraine in the case of a constitutional submission No. 252 of the deputies of Ukraine regarding the conformity to the Constitution of Ukraine (its constitutionality) of the Law of Ukraine “On Amendments to the Constitution of Ukraine” dated December 8, 2004 No. 2222-IV (the case of compliance with the procedures of amending the Constitution of Ukraine) No. 20-rp/2010 dated 30.09.2010; the case No. 1-45/2010.

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