Ukraine Has Approved the Procedure for Preliminary Approval of Transfer Pricing

Опубликовано: 03.11.2021

On October 28, the Cabinet of Ministers of Ukraine approved a resolution “On Approval of the Procedure for Preliminary Approval of Pricing in Controlled Transactions, as a Result of Which Unilateral, Bilateral and Multilateral Agreements are Concluded for Transfer Pricing Purposes”. The relevant Procedure must enter into force no later than January 1, 2022.

A unilateral, bilateral, or multilateral pricing agreement is a written agreement between a large taxpayer and the State Tax Service (STS) based on the arm’s length principle. A foreign tax authority whose activities are authorized by an international agreement on the avoidance of double taxation between Ukraine and the state it represents may also be involved in the procedure.

For the purposes of a preliminary review, the taxpayer has the right to apply to the STS with an application in electronic form for prior approval of pricing (the application form is included in the text of the Procedure as an appendix). The STS must notify the payer of the results of the review within 60 calendar days from the date of receipt of the application.

During the pricing approval procedure, the parties shall discuss the subject of such a procedure, the criteria for determining the compliance of the conditions of controlled transactions under the arm’s length principle, and must agree on a draft agreement within 30 days. The term of the agreement is determined by the parties, but may not exceed five years.

The taxpayer who concluded the agreement is obliged to submit an annual report on its implementation. There is a possibility to extend the agreement or its early termination if one of the parties does not agree with the proposed changes or if the STS establishes the fact of inaccurate information provided by the taxpayer in the application for the agreement or annual report, or non-compliance of the taxpayer with provisions of the agreement.


Tax Payer’s Compliance with the Risk Criteria

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