For multinational groups and foreign investors with Ukrainian operations, transfer pricing is an annual compliance obligation with hard statutory deadlines and substantial penalties. Ukraine's transfer pricing regime — set out in Article 39 of the Tax Code — follows the OECD framework: the arm's length principle, the familiar hierarchy of methods, local file and master file documentation. What differs is the local detail, and that is exactly where the Kanzas company adds value: we combine twenty-plus years of professional valuation practice in Ukraine with hands-on transfer pricing compliance work for importers, industrial groups and retail chains.
The arm's length principle in the Ukrainian regime
As in OECD jurisdictions, prices in transactions between related parties — and with counterparties in listed low-tax jurisdictions — must correspond to the arm's length principle: the terms independent enterprises would have agreed under comparable circumstances. Where an importer buys from a related non-resident above market, or an exporter sells below it, the tax authority treats the difference as profit shifted out of Ukraine and assesses additional corporate income tax. The taxpayer's defence is properly prepared transfer pricing documentation demonstrating that its pricing sits within the market range.
When transactions become controlled under Article 39
A transaction is controlled when two value thresholds are met simultaneously: the taxpayer's annual revenue exceeds UAH 150 million, and the volume of transactions with a single counterparty exceeds UAH 10 million (net of indirect taxes). The regime covers transactions with related non-residents, with counterparties from the Cabinet of Ministers' lists of low-tax jurisdictions and specific legal forms, and transactions structured through non-resident commissionaires. A separate rule applies to permanent establishments of non-residents, for which the UAH 10 million transaction threshold alone is sufficient. The controlled transactions report is filed annually by 1 October of the year following the reporting year, together with the notification of participation in a multinational enterprise group.
Our transfer pricing services
We support Ukrainian transfer pricing compliance end to end:
- analysis of the group's transaction flows and identification of controlled transactions;
- preparation of the annual controlled transactions report;
- transfer pricing documentation (local file) — the economic substantiation of arm's length pricing, ready for submission upon the tax authority's request;
- master file preparation for members of multinational enterprise groups;
- benchmarking studies: selection of comparable companies and transactions in commercial databases and calculation of the arm's length profitability range;
- pricing analyses for complex transactions — royalties, intra-group services, financial transactions.
Every conclusion in our documentation rests on a calculation, and every calculation on a verifiable data source — the standard a tax audit actually tests.
Transfer pricing methods and the valuation advantage
Article 39 mirrors the OECD toolkit: comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split. All five are, at their core, methods of economic comparison and income analysis — the daily instruments of the professional valuer. This is our structural advantage over purely accounting-driven providers: a market range, a royalty rate or a comparable company's margin is not an abstraction we quote from a database printout, but a figure we can independently derive and defend. The advantage is most visible in transactions involving intangibles, where a defensible transfer pricing study effectively rests on the valuation of royalty and licence rates.
Penalties and exposure
Failure to file the controlled transactions report, omission of transactions from it, or absence of transfer pricing documentation triggers penalties under clause 120.3 of the Tax Code, calculated in hundreds of statutory subsistence minimums and reaching into millions of hryvnias — regardless of whether the underlying prices were in fact arm's length. Costlier still is the assessment of additional corporate income tax with interest where pricing cannot be substantiated. Timely documentation remains the cheapest way to close this exposure.
Industry track record
Our transfer pricing clients include importers of vehicles and spare parts, a major chain of construction hypermarkets, one of Ukraine's largest agricultural holdings, and steel and pipe production plants — the industries with the largest volumes of controlled transactions: imports, commodity and product exports, and intra-group settlements, where the cost of a reporting error is highest.
Frequently asked questions
How does the controlled transactions report differ from transfer pricing documentation? The report is an annual filing due by 1 October listing all controlled transactions. The documentation (local file) is the full economic substantiation of pricing, prepared in advance and submitted within 30 calendar days of the tax authority's request.
Who must prepare a master file? Members of multinational enterprise groups with consolidated group revenue of EUR 50 million or more. The tax authority may request the master file, with 90 calendar days allowed for submission.
Our Ukrainian subsidiary only slightly exceeded the thresholds. Can it skip the filing? No. The Article 39 thresholds are formal: exceeding them by a single hryvnia creates the reporting obligation, and the penalty for non-filing does not depend on whether the prices were actually at arm's length.
How long does transfer pricing documentation take to prepare? From several weeks for a single transaction type to several months for groups with extensive intra-group flows. The optimal approach is to begin right after the reporting year closes, without waiting for a request.
The tax authority has already requested our documentation. What now? The statutory deadline is 30 calendar days, which is achievable if work starts immediately. Write to us by email or messenger: we will assess the transaction volume and tell you honestly what can be delivered within the deadline.
Ukrainian transfer pricing compliance forgives neither missed deadlines nor weak substantiation. Entrust it to a team for which proving that prices are at market is a daily profession: we work to the deadlines the Tax Code dictates and prepare documentation that withstands audit.
