The Ukrainian parliament on Thursday passed at first reading draft law No. 1861 on amendments to the Tax Code of Ukraine regarding transfer pricing, which is to finally remove the imposition of value added tax (VAT) on internal transactions from transfer pricing and increase the minimum limit for transactions under control from UAH 5 million to UAH 20 million.

An Interfax-Ukraine correspondent has reported that 229 MPs supported the bill.

One of the authors of the bill, Tetiana Ostrikova (Samopomich), said that in the passing of previous amendments to the law on transfer pricing at the end of 2014 contained two valuable requirements, on the basis of which fiscal agencies still apply the rules of transfer pricing during VAT taxation.

She said that the increase of the minimum limit for transactions under control with one contractor from UAH 5 million to UAH 20 million will exempt small and medium enterprises from transfer pricing, as this was not the purpose of adopting the law.

Head of the profile committee Roman Nasirov said that the government opposes the draft law, while the committee supported its adoption at first reading, apart from the requirement to increase the shares of holding corporate rights for each person in the chain of transactions from 20% to 50% as the conditions for applying transfer pricing to the transactions.

The bill proposes that the list of goods listed on exchanges is to be defined by the Cabinet of Ministers. The fine for non-declaration of transactions under control from 5% to 1% of the sum of undeclared transactions has been reduced.