Ukraine: New transfer pricing rules

Ukraine: New transfer pricing rules

The Ukraine’s Law as of 04.07.2013 № 408-VII ‘On Changes to the Tax Code of Ukraine in respect of transfer pricing rules’ came into force on 1 September 2013.

In particular, the draft provides:

  • list of controlled transactions (transactions between related parties or with low-tax jurisdictions);
  • transfer pricing methods and their application;
  • rules for determining the arm’s length price;
  • transfer pricing documentation requirements;
  • rules and procedures for transfer pricing audits, adjustments, and penalty provisions.


The most important provisions of the Law are listed below.

1. Controlled transactions

The Law applies only to controlled transactions with the following parties stated in the article 39.2.1. of the Ukraine’s Tax Code:

  • Related parties, non- residents of Ukraine.
  • Related parties, residents of Ukraine provided certain conditions listed in the Law.
  • Residents of low tax jurisdictions. The list of the low tax jurisdictions will be set by the Cabinet of Ministers of Ukraine.

A transaction may be considered as controlled (i.e., subject to transfer pricing requirements) only when the aggregate value of transactions conducted with one counterparty during a calendar year exceeds UAH 50 million, net of VAT.

2. Advance pricing agreements with the Ministry of Income and Charges

Large taxpayers have the right to agree in advance on the prices in controlled transactions with the Ministry of Income and Charges.

According to Article 14.1.24. of the Tax Code of Ukraine large taxpayer is a legal person, who has the amount of income from all activities in the last four consecutive tax (reporting) quarter exceeds 500 mln. or the total amount paid to the State Budget of Ukraine for the payment of taxes, controlled by the state tax service, for the same period more than 12 mln.


As the tax authorities all over the world increase their focus on transfer pricing, taxpayers should pay the pricing and documentation of their related party transactions with careful consideration.

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