Transfer Pricing

Our team's specialists support customers feeling safe by providing comprehensive services to reduce tax risks in the field of transfer pricing. Our experience of 7 years includes comprehensive services and consulting on transfer pricing in various industries.

WHAT IS TRANSFER PRICING

Transfer pricing establishes price control in operations between related parties as well as with counterparties in low-tax jurisdictions.

The basic rule is that prices in transfer operations should correspond to the level of prices that would have developed between independent companies in the same conditions.

IT IS ACTUAL FOR:

  • companies engaged a foreign economic activity (including exports / imports, financial services, operations with intangible assets);

  • total volume of controlled operations with each counterparty exceeds UAH 10 million;

  • company's annual income exceeds UAH 150 million.

CATEGORIES OF CONTRACTORS:

  • related non-residents;

  • non-resident commission agents through whom companies sell / purchase goods / works (services);

  • counterparties from low-tax jurisdictions;

  • non-resident contractors from the list of organizational and legal forms of the Cabinet of Ministers of Ukraine;

  • nominal intermediaries;

  • permanent representations.

WHAT IS NEEDED

  • preparation of a report on controlled operations and its submission to the State Tax Service by October 1 of the year following the reporting year;

  • preparation of documentation on transfer pricing and its storage for 7 years.

  • RESPONSIBILITY

  • failure to submit a report on controlled operations - a fine of 300 living wage (UAH 630 600 in 2020);

  • undeclared controlled operation in the report on controlled operations - a fine of 1% of the amount of the controlled operation (but not more than 300 living wage for all undeclared controlled operations);

  • failure to submit a documentation on transfer pricing - a fine of 3% of the amount of the controlled operation (but not more than 200 living wage for able-bodied persons for all controlled operations).

During the analysis of controlled operations, our specialists apply a comprehensive approach to transfer pricing, taking into account current legislation, expected changes to it and international principles. This approach supports our clients to comply with the law and creates additional confidence. We will save your time to study the nuances and features of the preparation of the report and documentation on transfer pricing.

It is important for the client to have a clear understanding of all the risks of their controlled operations at the stage of their implementation in order to be able to create an effective and reliable basis for further ensuring the proper justification of their pricing. This is the most effective way to minimize tax risks from transfer pricing.

Our services include:

  • identifying of controlled operations;

  • methodological support in preparing a report on controlled operations;

  • preparation of transfer pricing documentation;

  • conducting comparative investigations to determine the market price;

  • updating of transfer documentation for submission to regulatory authorities;

  • support of inspections in the field of transfer pricing;

  • preparation of transfer documentation to avoid 30% adjustment in the income tax return;

  • consulting on transfer pricing;

  • analysis of transfer pricing documentation for completeness and compliance with legal requirements.

IDENTIFYING OF CONTROLLED OPERATIONS

At the stage of preparation of the report on the controlled operations of the enterprise most often face the following risks:

  • incorrect identification of controlled operations;

  • reflection of controlled operations in the report not in full.

Our specialists will support you to avoid these risks by performing a detailed analysis of all operations with non-residents. To do this, we will conduct operational testing to identify controlled operations and operations that risk being recognized as controlled.

METHODOLOGICAL SUPPORT IN PREPARATION OF THE REPORT ON CONTROLLED OPERATIONS

The most important step in transfer pricing is the preparation and submission of a report on controlled operations, which is submitted by October 1 of the year following the reporting year. Correctly compiling a report on controlled operations we will support:

  • fill the data in the report correctly;

  • find sources for the most relevant information to complete the report quickly;

  • choose the necessary method of transfer pricing;

  • segment the company's activities;

  • calculate the profitability of the controlled operation;

  • pre-calculate the market range of prices or profitability indicators;

  • draw a conclusion about the compliance of the controlled operation with the «arm's length principle»;

  • check the correctness of filling out the finished report;

  • provide recommendations on resolving technical issues of submitting a report on controlled operations to the tax authorities.

PREPARATION OF TRANSFER PRICING DOCUMENTATION

When preparing transfer pricing documentation we offer the following services:

  • preparation of transfer pricing documentation on in full or its separate sections;

  • implementation of functional and risk analysis, substantiation of the transfer pricing method;

  • analysis of the availability of "internal" comparable operations and profitability indicators of such operations;

  • conducting research on the selection of comparable companies using the specialized database "Ruslana" and the information platform "Cbonds";

  • economic analysis and comparative analysis of prices / profitability indicators.

UPDATING OF TRANSFER DOCUMENTATION FOR SUBMISSION TO SUPERVISORY AUTHORITIES

Checking the completeness of the information provided in the documentation for previous periods to the requirements of the legislation in the field of transfer pricing on the date of its submission to the State Tax Service. Updating and supplementing data.

SUPPORT OF INSPECTIONS IN THE FIELD OF TRANSFER PRICING

  • preparation of information on the subject of inspection;

  • support in preparing a package of primary documents for separate controlled operations;

  • representation of interests in State Tax Service authorities.

PREPARATION OF TRANSFER DOCUMENTATION FOR AVOIDING OF 30% ADJUSTMENT TO THE INCOME TAX DECLARATION

We conduct a comprehensive identification of operations that may require the preparation of transfer pricing documentation without reporting. These are operations that require transfer documentation or increase the pre-tax financial result in the amount of 30% of the value of goods, works (services) received from a non-resident registered in a state with low tax jurisdiction according to the list approved by the Resolution of Cabinet of Ministers of Ukraine in 27.12.2017 №1045, or has an organizational and legal form from the list approved by the Resolution of the Cabinet of Ministers of Ukraine in 04.07.2017 №480 without reporting. For avoiding these risks, we support to prepare documentation for all the requirements of the Tax Code of Ukraine.

TRANSFER PRICING CONSULTING

  • comprehensive or one-time consulting on transfer pricing;

  • preparation of a response to requests of the State Tax Service regarding transfer pricing.

ANALYSIS OF TRANSFER PRICING DOCUMENTATION FOR COMPLETENESS AND COMPLIANCE WITH THE REQUIREMENTS OF THE LEGISLATION

Our team has sufficient knowledge and experience and is ready to competently analyze reports and documentation on controlled operations prepared by specialists of your company, provide reviews and advice on the correctness of controlled operations in such reports, completeness and proper justification of transfer operations in the documentation. The recommendations of our experts will allow you to eliminate the shortcomings of such documentation quickly.