Control over compliance with conditions of controlled operation of the "arm's length" principle has been improved

It should be informed that Order of the Ministry of Finance of Ukraine № 673 as of 07.12.2023 entered into force on February 6, 2024 with changes and additions made by Order of the Ministry of Finance of Ukraine № 725 as of 27.12.2023 (hereinafter – Order № 673), which made changes to:

- form of Report on controlled operation approved by Order  of the Ministry of Finance of Ukraine № 8 as of 18.01.2016 "On approval of the form and Procedure for compiling Report on controlled operation" (hereinafter – Order № 8);

- forms of the transfer pricing annex to the Corporate income tax declaration, approved by Order of the Ministry of Finance of Ukraine № 897 as of 20.10.2015;

- Procedure for compiling Report on controlled operations, approved by Order № 8.

Report on controlled operations carried out by taxpayers during the reporting year 2023 must be compiled and submitted to the controlling body in the updated form and in Procedure approved by Order № 673.

Provisions of Paragraph 46.6 Article 46 of the Tax Code of Ukraine (hereinafter – Code) provide that if forms of tax reporting are changed as a result of changes in taxation rules, before the determination of new forms of declarations (calculations), which come into force for preparation of reports for tax period that follows tax period, in which their publication took place, are valid forms of declarations (calculations) until such determination.

In view of the above specified, Reports on controlled operations carried out by taxpayers during the reporting year2023, submitted by taxpayers before entry into force of Order № 673 and development of relevant electronic formats for submitting Report on controlled operations in the updated form, are considered valid.

In case of submitting clarifying calculation to corporate income tax declaration for previous tax (reporting) year for purpose of making independent adjustment according to Article 39 of the Code or when determining tax base according to Sub-paragraph 141.9 1.3 Paragraph 141.9 1 Article 141 of the Code in case of controlled operations, if their conditions do not comply with the "arm's length" principle, not later than October 1 of year following the reporting year, a fine of three percent of the amount of underpayment is not applied (Paragraph 50.1 Article 50 of the Code).

Income tax payers, in case of self-adjustment of price of controlled operation and amount of taxpayer's tax liabilities, carried out according to Sub-paragraph 39.5.4 Paragraph 39.5 Article 39 Section I of the Code, will be able to submit the Transfer pricing annex to the Corporate income tax declaration according to the updated form (including in connection with clarification of indicators for the tax (reporting) year 2023), starting from 07.01.2024.