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Transfer pricing is aimed to control price formation in transactions between associated persons and also with counterparties from low tax jurisdictions. An ultimate principle of transfer pricing is in the following – the prices on controlled transactions have to comply with the standard of regular prices which could be between independent companies in the same conditions.

Controlled transactions in accordance with the principles of the  Internal Revenue Code of Ukraine in case of transactions excess of threshold in 5 million grivnas  per year between counterparties are:

  • transactions with all associated non-residents;
  • transactions with associated companies – residents, unprofitable or having tax allowance;
  • transactions with counterparties from low tax jurisdiction.

The methodology and sources of information for transfer price determination have been established by the Internal Revenue Code. The following penalties are provided by the current legislation for violation of the transfer pricing rules:

  • in case of not providing the report - a penalty of 300 minimum wages is inflicted;
  • in case of hidden transactions in the report - a penalty of 1% of the amount of such transactions is charged.

We offer our clients transfer pricing services focused on  comprehensive solution of issues related to price determination on controlled transactions and  documentation and reporting preparation:

  • collection and analysis of information about intra-group transactions, identification of controlled transactions;
  • analysis of transfer pricing risks taking into account the existing regulations and development of recommendations to reduce them;
  • selection and justification of the pricing methods;
  • analysis and comparability of the prices on comparable uncontrolled transactions;
  • providing information about the prices of controlled transactions from the official and alternative sources;
  • calculation of the market price range, profitability; carrying out a comparability analysis;
  • preparation of documentation on the controlled transactions to confirm the applied prices;
  • preparation of documentation to submit it to the regulatory authorities.

Also, our company provides the services for effective implementation of transfer pricing systems and maintenance of controlled transactions:

  • consultations on transfer pricing;
  • development and implementation of the transfer pricing regulation;
  • development and implementation of the methodologies and documentation of transfer pricing;
  • development of the transfer pricing policy for profitable transactions;
  • preparation of responses to the requests from the regulatory authorities regarding transfer pricing;
  • maintenance of inspections by the regulatory authorities on transfer pricing, representation and defense in court.