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On 4 July 2013, the Law "On the Amendments to the Tax Code regarding Transfer Pricing" was adopted by the parliament.

In summary, the amendments:

-   introduce revised definitions of the related persons and controlled transactions;
-   eliminate the 20% safe-harbour rule;
-   clarify the procedure and specifics of using the transfer pricing methods;
-   enable execution of advance pricing arrangements;
-   introduce a special mechanism enabling the tax authorities to monitor and audit the compliance with the transfer pricing rules; and
-   introduce onerous transfer pricing reporting requirements and significant tax penalties for failure to comply with these requirements.

Based on the amendments, the transactions are deemed to be controlled if the annual transaction volume between the two parties exceeds the threshold of UAH 50 million (excluding VAT), and the transactions are concluded with:

-   related resident entities that as of the beginning of the tax year:
-   declared losses in the previous tax year;
-   use a special tax regime;
-   use a different corporate income tax rate and/or a different VAT rate than the basic rates; and
-   are not registered as taxpayers with regard to corporate income tax and/or VAT.
-   related parties that are non-resident; or
-   non-related parties that are resident in jurisdictions where the income tax rate is lower than in Ukraine with at least 5% or more (i.e. 14% in 2013 and 11% in 2014).

Also, the amendments introduce the obligation of the taxpayers to notify the tax authorities of controlled transactions. The notification should be submitted annually by 1 May of the year following the reporting tax year. The transfer pricing documentation should be submitted within 1 month (2 months for large taxpayers) upon tax authorities' request.

The amendments will become effective from 1 September 2013.