Ukraine – Transfer Pricing (2025)

Legal framework and scope

Ukraine’s transfer pricing (TP) regime is primarily governed by the Tax Code of Ukraine, notably Article 39 and related provisions dealing with corporate profit taxation. Article 39, clause 39.1 of the Tax Code expressly enshrines the arm’s length principle: “The taxpayer that participates in a controlled transaction must determine the amount of his taxable profit in accordance with the arm’s length principle… If the conditions in one or more controlled transactions do not comply with the arm’s length principle, the profit that would be accrued to the taxpayer in a controlled transaction that complies with this principle is included in the taxable income of the taxpayer” (Tax Code of Ukraine Article 39, clause 39.1). The material scope is determined by the definition of controlled transactions and the related-party rules set out in Article 14, clause 14.1, sub-clause 14.1.159 of the Tax Code.

Transactions are deemed controlled for documentation purposes when quantitative thresholds are met: certain transactions (including those listed in sub-clauses 39.2.1.1 and 39.2.1.5) are treated as controlled if the taxpayer’s annual income exceeds UAH 150 million (net of indirect taxes) and the volume of transactions with each counterparty exceeds UAH 10 million (net of indirect taxes) for the relevant reporting year. Transactions between a non-resident and its permanent establishment in Ukraine are controlled if their volume exceeds UAH 10 million (net of indirect taxes) (Tax Code of Ukraine Article 39, clause 39.2, sub-clause 39.2.1).

Arm’s length principle and role of the OECD Transfer Pricing Guidelines

The OECD Transfer Pricing Guidelines (TPG) are not directly incorporated into Ukrainian statute, but they are recognised as internationally accepted guidance clarifying application of the arm’s length principle. Ukrainian law implements methods and comparability provisions that largely reflect Chapter III of the TPG and explicitly provides for the application of the “most appropriate method” within a hierarchy of methods, except where the Tax Code prescribes a specific method for a certain type of transaction (Tax Code of Ukraine Article 39, clause 39.3, sub-clause 39.3.2 and sub-clause 39.3.2.1).

Definition of related parties

Article 14, clause 14.1, sub-clause 14.1.159 of the Tax Code contains a comprehensive definition of related parties encompassing legal entities, individuals and non-legal formations whose relationships might affect terms or economic results. For legal persons, a primary criterion is direct or indirect ownership of corporate rights equal to 25% or more (with certain exceptions for international financial institutions and cases of >75% ownership). Other control indicators include the same entity or individual making appointments of a sole executive body or at least 50% of a collegial executive body, identity of at least 50% of members of collegial bodies, appointment of executives by the same owner or authorized body, shared ultimate beneficial owner/controller, identical exercise of executive powers, and high levels of loans/financial assistance relative to equity (exceeding 3.5 times on average for the reporting period; 10 times for financial institutions and leasing companies). For individuals, analogous criteria apply (25% ownership, appointment rights, being beneficial owner). Close family relations are explicitly listed (spouse, parents including adoptive parents, children including adopted, full and half siblings, guardian/ trustee), and the Code details how to aggregate direct and indirect holdings across chains and how to treat multiple chains. The statute also allows tax authorities to prove relationships by facts and circumstances in court where necessary (Tax Code of Ukraine Article 14, clause 14.1, sub-clause 14.1.159).

Methods and application criteria

Ukraine’s legislation recognises the principal TP methods: Comparable Uncontrolled Price (CUP), Resale Price, Cost Plus, Transactional Net Margin Method (TNMM) and Profit Split, and allows other methods where appropriate. The Tax Code authorises the use of a discounted cash flow (DCF) valuation methodology specifically for controlled transactions involving intangibles, other intellectual property and business restructuring where comparables are absent (Tax Code of Ukraine Article 39, clause 39.3, sub-clause 39.3.10). Application of methods follows a hierarchy but the “most appropriate method” should be selected based on facts and circumstances, except where the Tax Code prescribes a particular method for a transaction type (Tax Code of Ukraine Article 39, clause 39.3, sub-clause 39.3.2 and sub-clause 39.3.2.1).

For commodities included in the Cabinet of Ministers’ list, the Tax Code mandates the use of the CUP method. The List of Commodities is set by Resolution No. 1221 dated 09.12.2020, and the State Tax Service publishes recommended (non-exhaustive) sources for quoted commodity prices (Tax Code of Ukraine Article 39, clause 39.3, sub-clause 39.3.3 and sub-clauses 39.3.3.4 – 39.3.3.8).

Comparability and ranges

Comparability rules are provided in Article 39, clauses 39.2 and 39.3 and largely follow the TPG Chapter III. Ukrainian law shows a preference for domestic comparables: taxpayers must demonstrate that foreign comparables are more reliable than local ones if they wish to rely on foreign data (Tax Code of Ukraine Article 39, clause 39.2, sub-clause 39.2.2, sub-clause 39.2.2.2). The Tax Code permits and expects adjustments to mitigate material differences so as to preserve comparability (Tax Code of Ukraine Article 39, clause 39.2, sub-clause 39.2.2, sub-clause 39.2.2.1).

Use of an arm’s length range and statistical measures is mandated: the Tax Code requires use of a price (profitability) range to determine compliance with the arm’s length principle and the procedure for calculating the range and the median is set by Resolution No. 381 dated 04.06.2015 “On approval of the Procedure for calculating the price (profitability) range and the median of such range for transfer pricing purposes” (Tax Code of Ukraine Article 39, clause 39.3, sub-clause 39.3.2, sub-clause 39.3.2.2 and sub-clause 39.3.2.3).

The use of “secret comparables” by the tax administration is not permitted: tax authorities may not use information that is not publicly available, except where information was lawfully obtained in the course of an audit on the taxpayer’s arm’s length compliance (Tax Code of Ukraine Article 39, clause 39.5, sub-clause 39.5.3, sub-clause 39.5.3.3).

Documentation and reporting requirements

Ukraine requires transfer pricing documentation including Master File, Local File and Country-by-Country (CbC) reporting consistent with the Chapter V annexes of the OECD TPG. Under Article 39, clause 39.4, taxpayers that carried out controlled transactions in a reporting year must file a Report on controlled transactions and a Notification on participation in an international group of companies by October 1 of the year following the reporting year. Filings are electronic to the central executive body responsible for implementing state tax policy (Tax Code of Ukraine Article 39, clause 39.4).

Transfer pricing documentation must be submitted to the requesting authority within 30 calendar days from receipt of the request; the request shall not be sent earlier than October 1 following the year in which the controlled transaction(s) took place (Tax Code of Ukraine Article 39, clause 39.4). The Master File may be requested where the group’s consolidated revenue for the financial year preceding the reporting year, calculated under the parent company’s accounting rules, equals or exceeds EUR 50 million. The request window is no earlier than 12 months and no later than 36 months after the end of the group’s financial year (or after the end of the reporting year if the financial year is not specified). The required Master File must be submitted within 90 calendar days of request receipt (Tax Code of Ukraine Article 39, clause 39.4, sub-clause 39.4.7).

CbC reporting obligations apply where a Ukrainian resident belongs to an international group whose consolidated revenue for the preceding financial year, calculated under the parent’s accounting standards (or in absence, under international accounting standards), exceeds EUR 750 million and certain conditions apply (e.g. the taxpayer is the parent or is authorised by the parent to file, or the parent’s jurisdiction does not require filing and the parent has not authorised another member to file, or bilateral exchange of CbC is not yet in force or there is evidence of systemic non-compliance). The CbC report is prepared for the parent company’s financial year and must be filed within 12 months after the end of that financial year (Tax Code of Ukraine Article 39, clause 39.4).

Local documentation must include, inter alia, a list and brief description of important service arrangements between MNE members (excluding R&D), descriptions of capabilities of principal service locations and transfer pricing policies for cost allocations and pricing of intra-group services (Tax Code of Ukraine Article 39, clause 39.4, sub-clause 39.4.7).

Penalties and compliance incentives

The Tax Code provides a detailed penalty regime for TP documentation and reporting failures (Article 120, clauses 120.3 – 120.6). Penalties are expressed as multiples of the subsistence minimum for an able-bodied person as of 1 January of the reporting year and vary by type of failure. Key figures include: 300 times the subsistence minimum for failure to file the Report on controlled transactions; 3% of the amount of undocumented controlled transactions (but not more than 200 times the subsistence minimum) where documentation required under sub-clauses 39.4.6 and 39.4.9 is missing; 300 times the subsistence minimum for failure to file the Master File where required; 1,000 times the subsistence minimum for failure to file the Country-by-Country Report; 50 times the subsistence minimum for failure to file the Notification on participation in an international group. Payment of penalties does not relieve the taxpayer of the obligation to file the missing documentation.

Additional penalties apply for incomplete or inaccurate filings: omission of controlled transactions in the Report incurs 1% of the amount of undeclared controlled transactions (up to 300 times the subsistence minimum); omission of required information in CbC incurs 1% of the revenue of the omitted group member (up to 1,000 times the subsistence minimum). Late filing penalties are calculated per calendar day with ceilings specific to each filing category (Tax Code of Ukraine Article 120, clauses 120.3 – 120.6).

The law also prescribes fines for failure to submit documentation after 30 calendar days following the last date for penalty payment (5 times the subsistence minimum per day, up to 300 times the subsistence minimum), and differentiated daily penalties for late submission of Master File, CbC and other documentation, each with specific daily multiples and maxima (Tax Code of Ukraine Article 120, clauses 120.3 – 120.6).

APAs, MAP and timelines

Ukraine provides administrative tools to prevent and resolve TP disputes. General APA provisions are in Article 39, clause 39.6 of the Tax Code and the detailed APA procedure is established by Resolution of the Cabinet of Ministers No. 1114 dated 28.10.2021 “On approval of the Advanced Pricing Agreement procedure in controlled transactions…”. The Ministry of Finance’s Order No. 820 dated 30.12.2020 sets out the MAP application procedure and requirements. Large taxpayers (as defined in sub-clause 14.1.24) may apply for unilateral, bilateral or multilateral APAs. An APA has a 5-year duration and can be extended for an additional 5 years at the taxpayer’s request; it may be applied to the reporting period in which it is concluded and to preceding reporting periods that were not subject to arm’s length audits. There are no special fees for APA applications (Tax Code of Ukraine Article 39, clause 39.6; Resolution of the Cabinet of Ministers of Ukraine No. 1114 dated 28.10.2021; Order of the Ministry of Finance No. 820 dated 30.12.2020).

Secondary adjustments, year-end adjustments and re-characterisation

Ukrainian law allows self-adjustments (year‑end adjustments) where a taxpayer applies conditions not in accordance with the arm’s length principle or lacking reasonable business purpose. The taxpayer may adjust prices and tax liabilities so long as the adjustment does not reduce tax payable to the budget, by re-calculating liabilities using the maximum or minimum of the arm’s length range as appropriate. Self-adjustment is not permitted during an on‑site audit examining arm’s length compliance, and any tax liability resulting from self-adjustment must be paid in accordance with Article 57 (Tax Code of Ukraine Article 39, clause 39.5, sub-clause 39.5.4).

Secondary adjustments are recognised in Ukraine using the concept of constructive (deemed) dividends for payments, income or compensation exceeding amounts calculated under the arm’s length principle (Tax Code of Ukraine Article 14, clause 14.1, sub-clause 14.1.49; Tax Code of Ukraine Article 141, clause 141.4, sub-clause 141.4.2).

Attribution of profits to permanent establishments

Ukraine has not adopted the Authorized OECD Approach (AOA) for profit attribution to permanent establishments. Ukraine’s tax treaties do not include the revised Article 7 of the OECD Model Tax Convention (2010 onwards), so the AOA is not applied under treaty practice. The Tax Code states that the profit of a permanent establishment shall be considered as the profit of an independent enterprise for taxation purposes and that such profit must comply with the arm’s length principle (Tax Code of Ukraine Article 141, clause 141.4, sub-clause 141.4.7).

Intangibles, intra-group services and financial transactions

The Tax Code explicitly allows DCF valuation for intangibles and reorganisation transactions when comparables are lacking (Tax Code of Ukraine Article 39, clause 39.3, sub-clause 39.3.10). There are no specific domestic measures for hard-to-value intangibles (HTVI) in the profile (the profile indicates “No” for HTVI special measures). Outside of TP rules, Article 140, clause 140.5 contains provisions that affect the tax treatment of royalties: sub-clause 140.5.6 increases the financial result where royalties (to non-residents or in specified circumstances) exceed certain percentages related to net sales or operating income, and sub-clause 140.5.7 prescribes increases to the financial result where royalties are paid to non-residents who are not beneficial owners or where intellectual property originated from a resident, among other situations; these rules apply based on the tax (reporting) year result.

For intra-group services, the law does not provide domestic specific guidance or a simplified approach for low value-adding intra-group services: Ukrainian legislation tends to rely on the OECD TPG. Nevertheless, the Master File must include a list and brief description of significant intra-group service arrangements, other than R&D, and related transfer pricing policies (Tax Code of Ukraine Article 39, clause 39.4, sub-clause 39.4.7). For financial transactions there is no detailed domestic TP guidance in the profile; however, thin capitalisation rules exist under Article 140, clause 140.2. Interest expense deductibility is limited to 30% of profit and indebtedness to a non-resident exceeding equity by more than 3.5 times triggers the thin cap (10 times for financial institutions and leasing companies). If interest within a controlled transaction exceeds an arm’s length amount, thin capitalisation applies only to the interest amount determined by the arm’s length principle (Tax Code of Ukraine Article 140, clause 140.2).

Cost contribution arrangements and simplification measures

There is no specific domestic legislation on cost contribution arrangements; the Master File should list relevant agreements such as cost contribution arrangements, principal research service agreements and licence agreements where applicable (Tax Code of Ukraine Article 39, clause 39.4, sub-clause 39.4.7). The profile confirms that Ukraine does not have safe harbour rules or other unspecified simplification measures for TP (the profile marks “No” for safe harbours and other simplifications).

Other relevant aspects and conclusion

Ukraine’s TP framework is comprehensive and aligned in many respects with OECD principles, providing clear definitions, method hierarchy/most appropriate method guidance, mandatory use of arm’s length ranges with specified calculation procedures, mandatory CUP for commodities listed by Cabinet resolution, and a full documentation regime including Master File and CbC with explicit thresholds and timelines. APAs and MAP procedures are available and specified in national instruments (Resolution No. 1114/2021 and Order No. 820/2020). Where domestic rules are silent—such as simplified approaches for low value-adding services or detailed financial transactions guidance—the profile indicates reliance on the OECD TPG. The penalty regime is substantial and detailed, incentivising compliance and timely submission of required documentation. For complex cases (intangibles, restructurings, financing), taxpayers can seek APAs to obtain certainty and reduce audit risk.

References

For more information and access to the OECD transfer pricing country profiles: https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html