Self-adjustment of tax liabilities is a step towards improving tax culture of taxpayers and a key to building the European state

Due to the systematic and consistent work of the State Tax Service and its territorial bodies, a reasoned and constructive dialogue has been established with taxpayers who, without waiting for audits to begin, adjust the price of controlled operation and, as a result, independently increase the corporate income tax liabilities.

More than 1 thousand taxpayers during 2015 – 2022 (or 20% of the total number of reporters of controlled transactions) submitted 2300 corporate income tax declarations (clarifications) and independently increased financial result before taxation by more than 30.5 billion UAH for controlled operations, conditions of which do not correspond to the "arm's length" principle and/or reasonable economic reason (business purpose). As a result of these adjustments, an increase in the corporate income tax liabilities by more than 2.8 billion UAH and a decrease in the negative value of taxable object by more than 10.7 billion UAH were declared.

Despite the moratorium on documentary audits, in connection with the quarantine restrictions related to the COVID-19 and the martial law in Ukraine, taxpayers during 2020 – 2022 made independent adjustment of financial result before taxation by more than 15.9 billion UAH or 52% of the total amount of adjustments (income tax was increased by 1.6 billion UAH and negative value of taxation object was reduced by 3.9 billion UAH), including by 4.9 billion UAH during 2022.

Main task of the State Tax Service remains a constructive dialogue with taxpayers. Our goal is not to conduct audits, but to help business, in particular, in early detection and avoidance of possible risks. Only in cases where taxpayers do not pay attention to argumentations of tax officials regarding existing transfer pricing risks, cases are formed by the controlling body, which is ready for conducting control and audit measures after cancellation of moratorium on audits regarding compliance of conditions of controlled operation with the "arm's length" principle.

State Tax Service, taking into account complexity and novelty of the transfer pricing direction and international taxation in Ukraine, informs taxpayers that in each territorial body of the State Tax Service, appropriate units have been created and are functioning, which are open to dialogue with business. Active communication with taxpayers is supported using various platforms and methods of obtaining information, which can be found at the link https://tax.gov.ua/en/about-sfs/contacts/

Taking into account above specified, the State Tax Service recommends taxpayers to review audits carried out for compliance with the "arm's length" principle and take advantage of opportunity to make independent adjustments according to Sub-paragraph 39.5.4 Paragraph 39.5 Article 39 and Paragraph 50.1 of Article 50 of the Tax Code of Ukraine. And in case of additional questions, contact the State Tax Service for their clarification and solution.

At the same time, the State Tax Service expresses its gratitude to taxpayers for timely payment of taxes and levies. Today, this is extremely important mission that will ensure economic stability of the state. With our joint efforts, we maintain a high performance bar, which will allow us to continue achieving ambitious results on Ukraine’s path to the European Union and ensure economic stability of the state in the martial law conditions.