Controlled Operations Report
The report on controlled operations is an aid in filling out from AGTL Kharkiv, Kyiv, Odessa. The Form of the Controlled Operations Report (further report) and the Order of Its Filling (More – Order) are approved by order 669. The Report provides information about all transactions, which according to Article 39 of the Tax Code of Ukraine are controlled.
AGTL provides accounting and tax advisory services, as well as various projects, analysis, development, and implementation in various business sectors.
Our staff employs professionals with extensive experience in consulting projects.
We will provide advisory services in various areas of accounting and taxation.
Who Submits The Controlled Operations Report
The report on controlled transactions is required to be submitted by income tax payers who carried out controlled transactions in the reporting year (pp. 39.4.2 NKU). Therefore, the 2017 Controlled Operations Report represents only those taxpayers who carried out controlled transactions in 2017.
Controlled transactions are all types of transactions, contracts or arrangements, documented or unconfirmed, which may affect the object of taxation on income (pp. 39.2.1.4 NKU). However, for an economic operation to be considered controlled, it must meet the criteria specified in the pp. 39.2.1.1 NKU (relative to counterparties) and pp. 39.2.1.1 NKU (value criteria).
Form and deadline
According to pp. 39.4.2 NCU, The Report on Controlled Operations is submitted to the GFS until October 1 of the year following the reporting. The same is written in the order of compiling the Report on Controlled Operations, approved by the order of the Ministry of Finance of Ukraine on 18.01.2016 No. 8 (more – Order No. 8).
At the same time, if the last day of the report on controlled operations falls on a day off or a public day, the last day of the term is the operating (bank) day following a weekend or a holiday (p. 3 p. Order No. 8). Given that in 2018, September 30 falls on a day off (Sunday), the deadline for submitting the 2017 Report is 01.10.2018 (see. letter to the GFSU dated 10.07.2017 No. 17973/7/99-99-15-02-01-17).
The report on controlled operations should be submitted electronically in compliance with the requirements of the legislation on electronic paperwork and electronic digital signature (pp. 39.4.2 NKU).
The form of the Report on Controlled Operations (which must be submitted and according to the results of 2017) is approved by the order of the Ministry of Finance of Ukraine on 18.01.2016 No. 8.
What penalties are imposed for failure to submit a report or late submission of the KO Report?
Immediately note that from January 1, 2017, Article 120 of the NCU is divided responsibility for the failure to submit the KO Report and for submitting it late:
- failure to submit the KO Report entails a fine of 300 subsistence minimums set for January 1 of the reporting year (p. 120.3 NDCs);
- the late submission of the KO Report will cost one living wage, set on January 1 of the reporting year, for each day of delinquency, but a total of no more than 300 subsistence minimums for the entire period of overdue (p. 120.4 NK).
Thus, based on the deadline announced by the tax authorities for the submission of the KO Report for 2016 – Monday, October 2, 2017, the filing late in one day (Tuesday, October 3) will cost the payer 1378 UAH (since article 120 of the NCU is pegged to the living wage for able-bodied persons on January 1 of the reporting year, and the report is 2016). For the “right to file” the report on October 4 will have to pay 2756 UAH, and so on.
But it will be much worse to reach the documentary check, because if in its course the tax authorities find out from the company controlled operations, fined at once 300 subsistence minimums, i.e. 413,400 UAH!
Thus, it is better to submit a KO report a few days late and to pay one living wage for each day of delinquency, rather than to reach the documentary check and pay three hundred at once.
Is it a report?
Moreover, if you doubt for any reason whether or not to submit a KO report, it is better to imagine. The very fact of filing will save you from the risk of a fine of 300 subsistence minimums, if during the “documentary” they are considered as controlled operations. However, later it may be necessary to prepare documentation of TCOs for such operations, if they are interested in the tax authorities, but this is in any case the lesser of two evils.
By the way, the same approach is true for individual operations, in the “control” of which you for some reason doubt. It is better to include them in the report, albeit with possible errors for which there are no sanctions, than not to include and then pay 1% for each undeclared controlled operation (if as a result of a documentary verification they will be recognized as such).
Our advantages
- Long-term practitioner experience of professional specialists in transfer pricing;
- Identify tax risks arising from relationships with interdependent individuals and develop recommendations to minimize them;
- individual approach to your circumstances, which will help solve even the most difficult problems.
In order to justify the correspondence of the prices of controlled transactions to market prices, it is necessary to prepare all documentation on such transactions for submission to the tax authorities.
A report and a package of documents are prepared for each organization with which controlled transactions were made.
The improper failure to submit a report of controlled transactions made in a calendar year to the tax authority within the specified time limit, or the receipt of a report by the taxpayer to the tax authority on controlled transactions containing inaccurate information, entails the recovery of a fine.
Types of services
We provide transfer pricing services for reporting and documentation of controlled transactions. Our experienced specialists are successfully working in this area.
In preparing a report and documentation of controlled transactions, we carry out the following types of work:
- Business analysis
- Inventory of transactions and pricing principles
- justification of the method of determining market prices for tax purposes, the sources of information on comparable transactions;
- Checking the match of prices in controlled transactions to the market level;
- Preparing a report on controlled transactions;
- preparation of all documentation on the controlled transaction (group of transactions) for submission to the tax authority.
Based on the results, your company receives a ready report on controlled transactions for submission to the tax authority.
Our company has experience in transfer pricing, which will certainly help in minimizing tax risks arising from relationships with interdependent individuals.
Properly compiled report and well-designed documentation will protect your company from possible claims from tax authorities and fines.
The cost of reporting and documentation of controlled transactions depends on the nature of the company’s business, as well as on the number of controlled transactions made during the reporting period.
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We will advise you, help you organize a business, choose a tax system, and if necessary – accompany the process of organizing your business on legal, accounting, tax, as well as financial issues. And believe me, your money will certainly come back to you.