LAW OF UKRAINE

of December 17, 2020 No. 1117-IX

About introduction of amendments to the Tax Code of Ukraine and other laws of Ukraine concerning the ensuring data collection and information necessary for declaring of the separate taxation objects

The Verkhovna Rada of Ukraine decides:

I. Bring in the Tax code of Ukraine (Sheets of the Verkhovna Rada of Ukraine, 2011, Art. No. No. 13-17, 112) the following changes:

1. In Item 14.1 of Article 14:

1) in subitem 14.1.54:

in paragraph three of the subitem "i" of the word of "long-term lease, financial leasing or the similar agreement" shall be replaced with words "operating or finance lease (leasing) or the similar agreement, and such use shall be reflected in accounting of such legal entity as asset, including asset with right to use, according to requirements of national provisions (standards) of financial accounting or international accounting standards";

subitem in paragraph one "і" "the legal entity - the resident of Ukraine based on the agreement of long-term lease, financial leasing or the similar agreement" shall be replaced with words words "the legal entity - the resident of Ukraine based on the agreement of operating or finance lease (leasing) or the similar agreement, and such use shall be reflected in accounting of such legal entity as asset, including asset with right to use, according to requirements of national provisions (standards) of financial accounting or international accounting standards";

Subitem 14.1.231 to add 2) with the paragraph the sixth such content:

"This subitem is applied to the purposes of article 39 of this Code, including in case of proof of the circumstances testimonial of lack of the business purpose, in the cases determined by Item 140.5 of article 140 of this Code which provide application of relevant provisions of article 39 of this Code".

2. In Article 39:

1) in subitem 39.2.2 of Item 39.2:

add subitem 39.2.2.11 with the paragraph the second such content:

"If the parties of controlled transaction do not provide sufficient reasons for the actual behavior of the parties of the transaction and the actual conditions of its carrying out, functions, risks, assets are distributed for benefit of the party of controlled transaction which is resident of Ukraine";

add with subitem 39.2.2.12 of such content:

"39.2.2.12. If commercial and/or financial characteristics of controlled transaction for the purposes of transfer pricing, are determined according to the actual actions of the parties of the transaction and the actual conditions of its carrying out which differ from the conditions applied between untied persons taking into account availability of the reasonable economic reason (the business purpose) in comparable circumstances and will be determined that untied persons who act in comparable conditions and behave economically rationally taking into account the alternative options really available to each of agreement parties, would not enter such controlled transaction, the monitoring body has the right when calculating financial result of the taxpayer in the taxation not to consider (not to recognize) such controlled transaction or transaction can be replaced with alternative option for the purpose of determination of terms of the contract (contract) which would be approved by untied persons, which are effective economically rationally in comparable conditions.

In case of determination of alternative options for transaction, really available to each of agreement parties, it is necessary to consider whether there were other realistic options available to the either party which would result in more profitable economic effect if such party signed the agreement with untied persons instead of the conclusion of the transaction with the connected persons.

In case of increase in financial result up to the taxation of the taxpayer owing to not accounting (non-recognition) of controlled transaction according to requirements of paragraph one of this subitem other adjustments, stipulated in Article the 39th of this Code, are not applied, and in case of transaction replacement with alternative option compliance of conditions of such alternative transaction to the principle of "outstretched arm" is determined taking into account requirements of Item 39.3 of article 39 of this Code.

The obligation of proof of the circumstances provided by this subitem is assigned to monitoring body";

Subitem 39.3.2.1 of subitem 39.3.2 of Item 39.3 to state 2) in the following edition:

"39.3.2.1. Compliance of conditions of controlled transaction to the principle of "outstretched arm" is determined by means of application of method of transfer pricing which is the most reasonable to the facts and circumstances of making of the controlled transaction, except cases when this Code determines requirements for obligation of application of specific method of establishment of compliance of conditions of controlled transactions to the principle of "outstretched arm" for controlled transactions of certain type.

The most reasonable method of transfer pricing is chosen taking into account the following criteria:

feasibility of the chosen method according to nature of controlled transaction which is determined, in particular, on the basis of results of the functional analysis of controlled transaction (taking into account the carried-out functions, the used assets and the suffered risks);

availability of the complete and reliable information necessary for application of the chosen method and/or methods of transfer pricing;

comparability degrees between controlled and uncontrollable transactions, including reliability of adjustments of comparability if such are applied which can be used for elimination of discrepancies between such transactions.

The taxpayer taking into account the specified criteria uses any method which he considers most expedient, however if there is possibility of application and method of the comparative uncontrollable price, and any other method, the method of the comparative uncontrollable price is applied.

If taking into account such criteria the method of resale price or the "expenses plus" method and method of net profit or profit distribution can be applied by the taxpayer with identical reliability, the method of resale price or the "expenses plus" method is applied.

The taxpayer can not apply more than one method to determination of whether there correspond conditions of controlled transaction to the principle of "outstretched arm".

If the taxpayer used method which corresponds to provisions of this Article, establishment of compliance of conditions of controlled transactions of the taxpayer by monitoring body to the principle of "outstretched arm" is based on that method of transfer pricing which is applied by the taxpayer, except as specified, if the monitoring body proves that the method which is applied by the taxpayer is not the most reasonable.

Disclaimer! This text was translated by AI translator and is not a valid juridical document. No warranty. No claim. More info