Ukraine: Parliament adopts amendments to transfer pricing rules

On 13 May 2014 the Ukrainian Parliament adopted draft Law of Ukraine No. 4527 On Amending the Tax Code of Ukraine Regarding Improvement of Transfer Pricing (“Bill”).  The Bill eases liability of Ukrainian taxpayers for violating transfer pricing rules.

In particular, the Bill provides for the following:

1. It extends the deadline for submitting transfer pricing reports (“TP Reports”) for the last four months of 2013 from 1 May 2014 to 1 October 2014;

2 . It significantly reduces penalties for the violation of transfer pricing rules as follows:

a. the penalty for the failure to submit a TP report is decreased from 5% of the aggregate amount of the controlled transactions that were subject to reporting, to 100 times minimum statutory salary (as of today, UAH 121,800.00 (approx. EUR 7,613.00)); and

b. the penalty for the failure to submit transfer pricing documentation pursuant to the request of tax authorities is reduced from 100 times minimum statutory salary (as of today, UAH 121,800.00 (approx. EUR 7,613.00)) to 10 times minimal statutory salary (as of today, UAH 12,180.00 (approx. EUR 761.00)); and

3. It extends the application period of symbolic penalties of UAH 1 (approx. 6 eurocents) for failure to comply with the transfer pricing rules, until 31 December 2014.

We expect that the Acting President of Ukraine will sign the Bill into the law in the near future.