 |
Co-author
Anton
Babak
(junior
associate of Lavrynovych
and Partners Law Firm) |
On
September 1, 2013 the amendments to the Tax Code of Ukraine related
to transfer pricing entered into force. The said amendments have
particularly affected the methods of the computation of an arm’s
length price, which thereafter started being referred to as the
methods of the computation of a price in controlled transactions
(hereinafter – «CTs»).
The
list of methods remains unchanged. They are as follows:
- Method
of comparable uncontrolled price;
- Resale
price method;
- Cost
plus method;
- Transaction
net margin method;
- Transaction
profit split method.
However,
with the amendments to the Tax Code of Ukraine the rules for the
application of each of the above-mentioned methods have been worded
in a much greater detail. Furthermore, there have been introduced
some new terms related to the application of the methods. These are
such terms as gross margin of costs, net margin, net margin of
expenses, etc.
Since
September 1, 2013 the hierarchy of the said methods has been in
operation. A taxpayer may apply any method, however if there is a
possibility to employ the method of comparable uncontrolled price,
this particular method must be applied. It is also possible to use
several methods simultaneously (i.e. a combination of methods).
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