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Volodymyr Chyzhykov spoke during the conference "Abuse of rights in tax legal relations"

Abuse of rights in tax legal relations

From the beginning of the year, amendments to the Tax Code of Ukraine related to the new transfer pricing rules for permanent establishments came into force. Most taxpayers use the direct method, making income of the permanent establishment equal to the amount of its funding, which is determined by a non-resident itself. However, this approach does not allow the justification of profit received for transfer pricing purposes.

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Volodymyr Chyzhykov spoke during the conference "Abuse of rights in tax legal relations"

On 6 February 2018, the conference of Tax Advisors' Association "Abuse of rights in tax legal relations" was held. Volodymyr Chyzhykov, Senior Manager of KPMG in Ukraine, provided the event participants with insight into the new topic for the Ukrainian market "Permanent Establishments: BEPS overview".

From the beginning of the year, amendments to the Tax Code of Ukraine related to the new transfer pricing rules for permanent establishments came into force. Most taxpayers use the direct method, making income of the permanent establishment equal to the amount of its funding, which is determined by a non-resident itself. However, this approach does not allow the justification of profit received for transfer pricing purposes.

Based on BEPS rules, Volodymyr Chyzhykov advised participants to perform functional analysis (to identify the functions, assets and risks of the permanent establishment), to identify/confirm income of a non-resident received through the permanent establishment and to calculate the share of profit of the permanent establishment, taking into account the functional analysis and use of the transfer pricing methodology.
 

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