Transfer pricing: Ukrainian officials analyzed the EU experience 29.01.2021

Taxes represent an important resource for state budget replenishment. One of the priorities of the Ministry of Finance of Ukraine is to establish a taxation system that would ensure equality and fairness towards taxpayers.

Ukraine is developing a system of fair taxation also through the Organization for Economic Co-operation and Development (OECD) project “Base erosion and Profit Shifting” (BEPS).

In the process of developing such taxation system, a practical seminar “Joint audits. Solving practical cases in the field of transfer pricing”, where experts analyzed one of the elements of BEPS implementation – transfer pricing (TP), which minimizes the tax costs for companies from different tax regimes.

During the seminar, German experts in the field of TP audit and international taxation − Mr. Alexander Leipold, Ms. Olga Asseburg-Witfeldt and Mr. Arno Neumann from the Federal Central Tax Office (Bonn), presented the international experience (OECD, EU) and the German experience to Ukrainian colleagues. The seminar was held at the request of the State Tax Service.

On the Ukrainian side, the seminar was attended by representatives of the Department of International Cooperation of the State Tax Service, the Department of Tax Audit of the State Tax Service, the central administrations of the State Tax Services of all regions of Ukraine and the Department of International Taxation.

Of a particular interest to Ukrainian experts was the prospect of using such a tool as joint audits in the future with the necessary legal conditions, as well as assessment, resolution and discussion of practical cases from Ukraine and Germany in the field of transfer pricing in groups and with their German counterparts.

In general, during the three days of working discussion, German experts together with Ukrainian colleagues discussed the following issues:

  • Joint audits (objectives, legal framework, organizational structure, methods, experience (benefits and challenges), presentation of a successful cross-border cooperation case;
  • Solving practical cases of transfer pricing. Simulation on the topics: “Financial transactions, accrual of interest, hedging profits, losses from foreign exchange transactions” (group work, discussion of decisions and topics of the case);
  • Exchange of ideas and summarizing.

All this allowed the representatives of the State Tax Service and the Ministry of Finance to gain additional experience in the further implementation of the BEPS plan, primarily in the field of transfer pricing for companies and selection of necessary transfer pricing methods in accordance with OECD regulations.