KPMG Law Ukraine defended the interests of the leading holding in a tax dispute
The Court of Appeal affirmed a decision of the court of the first instance in favour of the company confirming the company's compliance with the requirements of the arm's-length principle.
After conducting unscheduled on-site tax audit on transfer pricing, the tax authority concluded that the prices applied to the company’s-controlled transactions were not in compliance with the “arm’s-length” prices and the arm's-length principle. As a result, there were issued the tax notices-decisions amounting to of UAH 1.5 billion.
The company engaged a team of KPMG Law Ukraine lawyers to appeal to the court of the first instance. This court ruled the dispute in favour of the company, however, the tax authority appealed against such decision to the Court of Appeal. KPMG Law Ukraine also succeeded in asserting the company’s rights at the Court of Appeal level, so the decision, which cancelled the above tax notices-decisions, became valid.
To prove that the comparable uncontrolled price (CUP) method that was used by the company is lawful, and that the prices applied to controlled transactions comply with the arm’s-length prices and the arm's-length principle, it was required to use analysis of the Ukrainian law, international practice related to transfer pricing disputes and also referrals application to transfer pricing rules and principles, OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.
Due to the coordinated work on submission of a sufficient evidential basis including an analysis of the contract terms and the characteristics of goods that affected pricing procedure, the courts recognised the contested tax notices-decisions as unlawful. To protect the company’s rights, KPMG Law Ukraine lawyers also analysed the data and information obtained from such reputable international publishers as Platts and the Metal Bulletin.
The project was implemented under the supervision of Konstantin Karpushin, partner, Tax & Legal, head of Transfer Pricing, by Larysa Antoshchuk, attorney-at-law, head of the Tax Dispute Resolution Group. Also, Nataliia Musiienko, Yurii Oliinyk, Sofiia Baranovska, and Artur Horholiuk, KPMG Law Ukraine lawyers, worked on this project.