The documents and their content may differ depending on the kind of transaction which triggers the transfer pricing rules (see above). However, the main principle is that the set of documents relating to a particular transaction has to be sufficient to prove that the value / price of that transaction is in line with fair market price.
Also, with effect from 2013 the Tax Code of Ukraine provides for major taxpayers (whose income for the preceding four tax quarters exceeds UAH 500 million (approximately EUR 45 million) or the total amount of taxes paid exceeds UAH 12 million (approximately EUR 1.1 million)) to make an advance pricing agreement (“APA”) with the principal tax authority of Ukraine, an option that was not previously available. However, it remains unclear whether the parties to an APA could set a price (or method of defining the price) for the local sale of imported goods at a lower level than the customs value of the goods. In other words, it is unclear whether the new provisions should be treated as overriding the general rule that the fair market price for the domestic sale of goods previously imported to Ukraine is no lower than the customs value of such goods.
a) Which transactions must be documented (all transactions with associated enterprises, or only those which exceed a particular threshold)?
Ukrainian law does not use a value / volume threshold but provides that transfer pricing rules apply to certain types of transaction (see above).
b) What is the definition of “associated enterprises” for the purposes of this requirement?
Ukrainian tax legislation gives a rather broad definition of “associated enterprises”, including but not limited to the following cases:
- A legal entity is considered to be an associated enterprise of another legal entity if it controls, is controlled by or is under common control with that other legal entity;
- A physical person is considered to be associated with a legal entity if that physical person or members of his / her family control the legal entity or if a physical person or members of his / her family are officers of the entity and are authorised to enter into transactions on its behalf.
The term “control” means that the entity / individual in question directly or indirectly owns at least 20% of the authorised capital and / or possesses majority voting power in respect of the appointment of the legal entity’s governing body and its entry into agreements of crucial importance.
c) For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on transfer pricing documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?
Not applicable to Ukraine.
d) Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require the taxpayer in your jurisdiction to provide information which is located in another state?
No, they do not bear that responsibility.
Yes, potentially the tax authorities may request such information. As a general rule, if the tax authorities require particular tax related documents / information, the taxpayer should provide such documents / information together with an explanation.
e) If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?
Ukrainian tax authorities may potentially accept such regional comparable studies, provided that they have been carried out by a dedicated state controlled agency or an approved provider of commercial information.
f) What language(s) are to be used by taxpayers in submitting the transfer pricing documentation?
The Ukrainian language has to be used in any communications with the Ukrainian tax authorities. If the documents / information are not in Ukrainian, a certified translation has to be provided.