Buying goods from an offshore non-resident: can 30% of costs be recovered?

Published 1 June 2016. Some rules have changed since; ask us for the current position.

Based on its 2015 results, a company fell under the controlled transactions rules: its total income exceeded UAH 50 million, and it bought goods from non-resident suppliers registered in an offshore jurisdiction (the Marshall Islands). The company filed its controlled transactions report by 1 May. In its 2015 corporate income tax return, it increased the financial result by 30% of the cost of the goods bought from offshore suppliers. Can the company file an amended return and recover that 30% of the cost?

If the company wants to fight for part of those expenses, the correction has to start with establishing the arm's length price level and preparing transfer pricing documentation (документація з ТЦО). Only after that can it file an amended return for 2015, where the correction in line 3.1.7 of Annex РІ must go together with an adjustment of expenses to the arm's length level through Annex ТЦ, as required by Article 39 of the Tax Code of Ukraine (Податковий кодекс України).

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