Ukrainian transfer pricing proposals present significant implications for taxpayers

The proposed rules include:

· An advance pricing agreement procedure;

· Eliminating the 20% safe harbour rule;

· Introducing transfer pricing definitions, including “related persons” and “controlled transactions”;

· Clarifying the use of prescribed transfer pricing methods;

· Introducing an audit mechanism within the tax authority; Allowing other parties in a controlled transaction to make an adjustment based on price corrections by the authorities; and

· Introducing reporting requirements and penalties for non-compliance.