Transfer pricing: A European perspective for Ukrainian legislation and practice

Abstract

The transfer pricing issue is urgent for Ukraine considering the extreme need to attract funds (including from foreign partners) for the reconstruction of the state in the conditions of martial law and post- war times. Given the above, the purpose of this study was to cover the specific features of the implementation practice and court resolutions regarding the transfer pricing disputes in Ukraine, as well as the prospects for implementing the relevant provisions of supranational directives of the European Union. The formal- logical and concrete-legal tools, including the abstraction, formal legal and comparative legal methods, helped to cover the legal status of participants in legal relations, application of the “arm’s length” principle, corresponding and compensating adjustments, procedure and functional characteristics of transfer pricing, evaluating the documentation, guaranteeing access to information sources of the appropriate quantity and quality, considering the practice of the Supreme Court of Ukraine regarding transfer pricing and the regulations of the European Union Transfer Pricing Directive. The study proved that confirming the amounts of expenses is to be implemented following the legally defined procedure for transfer pricing regarding the obligations to increase the financial result of the tax (reporting) period, proper tax reporting and control, responsibility for non-submission/overdue submission of a report on controlled transactions. The application of the “arm’s length” principle was established considering such imperative criteria as determining the taxable profit and checking the factual price in the relations with non-residents, comparability of economic transactions in the context of assessing the factual controlled transaction. Criteria for the comparability of economic transactions were summarised related to assessing the essential properties of the transaction itself, the nature of assets and risks, goods transferred and/or the services rendered, fundamental and dynamic strategies of behaviour, economic status, performed functions of associated participants in legal relations. The practical value of this study for researchers, law enforcement bodies, and stakeholders lies in the coverage of the European perspective on transfer pricing implementation for Ukraine