Five in one: foreign economic transaction at the crossroads of the tax target

The global trend of tax transparency and Law No. 466 stimulate additional attention to transactions with non-residents to avoid unplanned tax expenses.

Business target, beneficial owner, transfer pricing, "hidden dividends," main goal test, the permanent establishment - these and many other tax issues can easily turn into a "trap" for a successful business transaction.

According to the State Tax Service of Ukraine, during 2020, 332 special requests were sent to the competent authorities of other states, of which:

🔸 150 on transfer pricing;
🔸 182 on non-resident income.

It is expected that after processing the answers, Ukrainian taxpayers receive requests for the submission of information, transfer pricing documentation, will be included in the schedule, and/or they will begin checks on compliance with the "arm's length."

It is important to keep in mind that any information that the company provides to the request of the supervisory authority, in particular regarding the transfer pricing, the tax authorities can use to analyze and verify compliance with other legal requirements that are not directly related to the subject of the request.