On October 12, 2017, Larysa Antoshchuk, Manager, Head of the Tax Dispute Resolution Group, and Yevgeniia Marushchenko, Consultant, Transfer Pricing Group KPMG in Ukraine spoke at "Innovative Evidence - How to Win a Transfer Pricing Dispute?” workshop was held with the support of Liga: Zakon.
Experts’ presentations were divided into 3 modules. The first module included information on changes in legislation, documentation and specifics of conducting inspections on transfer pricing issues, as well as an overview of the documentation required. Yevgeniia Marushchenko provided a detailed overview of controlled operations, forward contracts and the taxpayer’s responsibilities, including preparation and adjustment of tax reporting.
“As seen from the survey conducted by KPMG, for most companies, preparation of transfer pricing documentation is driven by threat of significant penalties and the needs to comply with tax discipline. However, documentation should be rather viewed as the final stage of the pricing process, an effective tool for risk analysis and your protection,” Yevgeniia Marushchenko noticed.
The second module highlighted the trends of disputes over the TP, the procedure and timing of controlled transaction reporting, and the specifics of the TP inspections’ legitimacy challenging process.
The third module focused on shaping of evidence in transfer pricing disputes, formation of evidence base, specifics of processing documents received from non-residents from both public sources and commercial databases. Larysa Antoshchuk presented case studies of disputes involving low tax jurisdictions, operations with the UK partnership and, in the case of export transactions, via resident commissioners.
“There is a noticeable trend of almost all so-called "technical disputes" on transfer pricing issues lingering in the appellate court, while the decision of such court is critical to understand future risks to businesses. For example, we are aware of diametrically different approaches of appellate courts to resolving disputes with similar factual background and under the same provisions of law being in effect. This is particularly true in cases when certain categories of transactions are recognized as controlled transactions based on agent contracts or specific use of the low tax jurisdictions list. That being said, it would be interesting to hear the views of the appellate court judges so that to take them into account in the future for building a business protection strategy,” Larysa Antoshchuk said.