tax and legal alerts, Deloitte Ukraine


The list of legal forms of non-resident organizations, the transactions with which are to be treated as controlled, has been extended

Tax & Legal Alert

8 January 2020

On 24 December 2019, the Cabinet of Ministers of Ukraine adopted the Resolution “On Amending the Annex to Resolution of the Cabinet of Ministers of Ukraine No. 480 dated 04 July 2017” (hereinafter, the “Resolution”), effective 01 January 2020.

The Resolution extends the list of legal forms of non-residents (hereinafter, the “LF List”) which fall under the following rules:

  • Transfer pricing rules (irrespective of whether or not such non-residents are related parties)
  • Limitation on the deductibility of a part or full amount of expenses for purchasing goods, works, services, and the accrued royalty (Article 140.5 of the Tax Code of Ukraine). To avoid this restriction, transfer pricing documentation that substantiates the arm's length nature of the said transactions should be prepared.

The LF List now includes the below LFs of the specified countries:

  • Austria – GmbH & Co.KG (limited partnership)
  • Germany – GmbH & Co.KG, AG & Co.KG, UG & Co.KG (all of which are limited partnerships), GmbH & Co.KGaA, AG & Co.KGaA (both legal forms are joint-stock limited partnerships), GmbH & Co.OHG (general partnership)
  • Poland – Sp. z O.O. S.K. (limited liability partnership), Sp. z O.O. S.J. (general partnership)

The dialog between the controlling authorities and taxpayers as to whether transactions with non-residents in the above LFs are subject to TP control (i.e., with non-residents that may actually not pay CIT and whose LFs were not specified in the previous list of legal forms of non-resident organizations) was the trigger to the extended LF.

The updated LF List will apply to taxpayer transactions from 2020. Important note: if a non-resident specified in the LFO List obtains documents that confirm payment of CIT in the reporting period, this may be seen as the ground for treating transactions with such non-resident as uncontrolled.

If you have any questions regarding the information contained in this alert, please do not hesitate to contact our experts.

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