TIS Mindozyriva operated a Ukrainian marine grain terminal that provided stevedoring services, including receipt, storage, and transshipment of grain cargo from rail to sea vessels at a seaport. In 2015 it carried out controlled transactions for grain transshipment and related terminal services with non resident counterparties in the British Virgin Islands and Switzerland. The tax authority audited the 2015 controlled transactions and concluded that the service prices did not meet the arm’s length principle. It applied the comparable uncontrolled price method using external information on other terminal operators and issued corporate income tax assessments, including additional tax and a reduction of the negative value of the tax base. TIS Mindozyriva challenged the assessments and argued that its prices were consistent with internal comparable uncontrolled transactions and that the tax authority’s external data set was unreliable and not supported by proper comparability analysis. It relied on expert examinations obtained in the proceedings, which supported that the controlled prices were at arm’s length and that the tax authority’s range construction was methodologically unsupported. Judgment The courts annulled the assessments and the Supreme Court upheld that outcome. It agreed that the tax authority had not justified using other information sources over the sources used by TIS Mindozyriva to test the controlled transactions, had not shown that its sources produced a higher level of comparability, and had not substantiated the claimed differences and their effect on price. The court also accepted that a well reasoned and reliable expert opinion could support the arm’s length pricing applied by the taxpayer. Click here for English translation Click here for other translation ...