PROCEDURE FOR APPLYING ORDINARY PRICES UNDER THE TAX CODE OF UKRAINE | UBC

Section I of the Tax Code of Ukraine set out detailed approaches to determining an ordinary price. The Code provided specific methods used in international practice:

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• Comparable uncontrolled price method, or comparable sales method. The ordinary price is determined from the price of identical, or where they are unavailable homogeneous, goods, work or services sold to or purchased from an unrelated person under ordinary business conditions.
• Resale-price method. The contractual price on a subsequent sale of goods, work or services to a third party is used as the basis, less the relevant mark-up and selling costs.
• Cost-plus method. The price consists of the cost of finished products, goods, work or services plus a mark-up typical for the relevant activity under comparable conditions.
• Profit-split method. Profit from the transaction is determined and divided between the participants on an economically justified basis approximating the result that unrelated persons would have achieved.
• Net-profit method. Profitability indicators for the transaction, calculated against an appropriate base such as costs, sales or assets, are compared with indicators for transactions between unrelated persons under comparable economic conditions.

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The Cabinet of Ministers of Ukraine was to establish the procedure for applying these methods.

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