PJSC Vinnytsia Oil and Fat Plant’s sold oil from oilseeds (sunflower, rapeseed, soybean) to a British Virgin Islands affiliate during 2015 to 2017, which the tax authorities audited for transfer pricing and then assessed additional corporate income tax of about 37.6 million UAH based on the CUP method.
On appeal, the court found that the tax authority’s CUP analysis relied on data that were not shown to be publicly available for the audited years and whose methodology became available only later, so the sources could not support a reliable like-for-like comparison. It also held that for forward contracts in 2015 and 2016 the correct comparison date is the contract date, not the delivery date, making the authority’s price comparisons improper. Because the authority did not request additional transfer pricing information within 30 days of receiving the taxpayer’s TP documentation, that documentation was deemed complete and sufficiently justified. The court thus cancelled the tax assessment.
An appeal was then filed by the tax authorities with the Supreme Administrative Court.
Judgment
The Supreme Administrative Court dismissed the tax authority’s appeal and left the appellate ruling in force.
It agreed that the CUP method was inapplicable for 2015 to 2017 because the data used by the tax authorities were not publicly accessible in the audited years.
For forward contracts in 2015 and 2016 the relevant comparison date is the contract date, and the later rule that ties comparison to forward or futures prices with a notification requirement did not apply retroactively and the notification procedure was only approved in 2018.
The Court also noted that the authority sought no additional transfer pricing information within 30 days, so the taxpayer’s documentation was deemed complete and sufficiently justified.
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