Controlled Transactions Report
Companies that deal with non-residents, related parties or counterparties from low-tax jurisdictions may fall under transfer pricing rules. They must then file an annual controlled transactions report and keep documentation ready to justify their prices. MK Audit helps determine whether you have controlled transactions, prepares the report and documentation, and handles communication with the tax authorities.
The result for the client: a verified list of transactions, a report filed on time, transfer pricing documentation, and confidence that errors have been found before the tax office finds them. We have worked since 2000, are listed in the APOB register (No. 4624), and our auditors work together with tax lawyers.
What is included
- Analysis of the year’s transactions: identifying non-resident counterparties, related parties, transactions with jurisdictions and legal forms on the Cabinet of Ministers lists, and testing the value thresholds under Article 39 of the Tax Code of Ukraine.
- A conclusion on whether controlled transactions exist, with an explanation for management.
- Preparation and electronic filing of the controlled transactions report.
- Preparation of transfer pricing documentation: group overview, functional analysis, choice of method, benchmarking, justification of prices.
- Review of accounting records and source documents for transactions with non-residents before the report is filed.
- Replies to tax authority requests concerning the report and documentation, support during inspections.
- Advice and training for the client’s accountants on transfer pricing.
The three components of the service can be ordered together or separately.
| Service | When it is needed | Result |
|---|---|---|
| Check for controlled transactions | Every year after the reporting period closes, if there are transactions with non-residents | Written conclusion with the list of transactions and threshold calculations |
| Controlled transactions report | If controlled transactions exist for the year | Filed report and acceptance receipt |
| Transfer pricing documentation | For each controlled transaction, submitted at the tax authority’s request | Ready documentation that can be submitted within the statutory period |
Who needs it
- LLCs and joint-stock companies that buy or sell goods and services to non-residents, including parent and subsidiary companies.
- Representative offices of foreign companies and Ukrainian units of international groups that settle with head office.
- Companies dealing with counterparties from low-tax jurisdictions or with legal forms on the Cabinet of Ministers lists.
- Transfer pricing rules do not usually apply to NGOs and charitable foundations, but if a non-profit carries out business activity with non-residents, we will check whether a reporting obligation arises.
How the work goes
- Request and proposal. You send the list of non-resident counterparties and annual turnover with each, and we send a commercial proposal within 1 day.
- Contract and checklist. We sign the contract and hand over the list of documents: contracts, invoices, group structure.
- Execution. We analyse the transactions, prepare the report and documentation, and agree the descriptions of functions and risks with you.
- Result and support. We file the report, deliver the documentation and reply to tax authority requests.
Documents you will need
- list of non-resident counterparties with their countries of registration and annual transaction volumes;
- group ownership structure and information on related parties;
- contracts, specifications, invoices and acts for transactions with non-residents;
- trial balance and annual financial statements;
- cost calculations, price lists, information on pricing within the group;
- previous reports and documentation, if any were filed.
Timing
The controlled transactions report is filed by 1 October of the year following the reporting year; the tax office may request the documentation after the report is filed, and only a limited period is allowed to provide it. It is therefore best to analyse transactions in spring and prepare the documentation together with the report. Preparing the report takes one to two weeks, the documentation two to four weeks for each group of transactions.
Leave a request in the form below: a commercial proposal after we review the task, reply within 1 day. If the company also needs an audit of financial statements or bookkeeping, these services can be combined.
How do we know whether we have controlled transactions?
You need to check the counterparties (non-residents, related parties, jurisdictions and legal forms on the Cabinet of Ministers lists) and compare transaction volumes with the value thresholds in the Tax Code. We perform this check based on the year’s turnover and contracts.
How does the report differ from the documentation?
The report is filed annually and lists the controlled transactions. The documentation justifies that prices comply with the arm’s length principle and is submitted at the tax authority’s request.
What happens if the report is not filed?
The Tax Code provides for penalties for failing to file the report, omitting transactions and failing to provide documentation. The amounts depend on the violation, so checking transactions in advance is cheaper.
Do you prepare documentation in English?
Yes. Documentation for the tax office is prepared in Ukrainian, and we can prepare an English version for the group’s head office.