+ Word must be in search result. - Words must not be in search result. * Word start/end on characters before/after symbol. ""Words in quotes will be searched as phrase.

 

Important transfer pricing court practice: the cassation appeal of the tax office has been (partially) satisfied again by the Supreme Court – why is the case important and what significant nuances have not been taken into account?

author: Ivan Shynkarenko

13 November, 2023 Exclusive

On August 10, 2023, the Supreme Court of Ukraine issued a decision in a case examining fundamental approaches to the transfer pricing analysis made under the net profit method, namely approaches to the selection of companies, on the basis of which the market range of profitability will be calculated.

In this case, the company selection approach used by the Taxpayer reflects the usual approach most taxpayers use.

However, the tax authorities' approach involved two additional non-standard criteria.

That is, a fundamental question of transfer pricing practice arises before the courts in this case: is it appropriate for the tax authorities to introduce additional criteria that significantly reduce the number of companies selected, and shift the range on the "pro-fiscal" direction?

Unfortunately, certain important aspects of the dispute were overlooked by the judges. Today, the "scales of Themis" are tipped in favor of the tax authorities. This can have negative consequences: during transfer pricing audits, tax authorities will begin to manipulate the selection criteria to achieve the desired results.

Therefore, the consideration of the dispute continues and there is hope that during the re-examination in the appellate court, a reasonable assessment of the tax authorities’ approach will be provided.

The full version of the article is available in Ukrainian by the link.

 

Full text is open only for the subscribers.

Views 1710

SIMILAR POSTS

Better late than never: Legislators have finally decided to improve the rules on liability for correction of TP Reporting 12 March, 2025    1065

The Cabinet of Ministers of Ukraine has updated the list of low-tax jurisdictions 20 January, 2025    1467

The Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports has entered into force for Ukraine: Implications for participants of MNE groups in Ukraine 07 November, 2024    759

Changes in the characteristics of non-resident counterparties for recognising transactions as controlled or making a 30% adjustment for corporate profit tax purposes 02 August, 2024    1802

Alexander Minin and Ivan Shynkarenko participated in the round table discussion “Tax and Customs Audits – Practice and Innovations” at AНK Ukraine 23 July, 2024    1560

Ukrainian Court Denies Characterization As Stewardship Expenses 10 July, 2024    855

Alexander Minin and Ivan Shynkarenko spoke at the roundtable “Problems of exporters in time of war: regulatory challenges” 24 May, 2024    965

Comparables Selection Was Correct After All, Ukrainian Court Says 11 April, 2024    408

The case Olympex Coupe International v. State Tax Service: the Supreme Court of Ukraine has finally decided to disallow the tax office’s “creative” application of the transactional net margin method 01 March, 2024    1308

Comparables Analysis Insufficient; Ukrainian Court Remands Case 18 September, 2023    1101

“Massive” requests regarding application of the 30% adjustment on corporate income tax. What is wrong and what to do? 03 August, 2023    2162

Ukraine: The War is not an excuse to ignore Transfer Pricing Compliance 06 February, 2023    998

Comment