Ukrainian experience of implementation of European transfer pricing control requirements

Анотація

Since 2017, Ukraine has started implementing the BEPS (Base Erosion and Profit Shifting) plan to counter various areas of aggressive tax planning. Implementation of the BEPS plan is primarily carried out through the creation of a transfer pricing control system in Ukraine, which is aimed at reducing illegal tax sheltering through foreign economic transactions with interdependent or interested parties, as well as through transactions with counterparties that are registered or conduct business in «low-tax» jurisdictions. The purpose of this study is to assess the results of the implementation of European requirements in the audit system of foreign economic activity in Ukraine. The study is based on data from the State Statistics Service of Ukraine and the State Tax Service of Ukraine for 20182021. The study provides evidence of the use of transfer pricing mechanisms by Ukrainian companies to optimize income taxation, which is against the interests of the state. Therefore, there is a special need to improve state control over foreign economic operations. Changes and modern trends of foreign economic activity during the implementation of transfer pricing control since 2013 in accordance with the BEPS plan are considered. This study shows that immediately after the expansion of the list of low-tax jurisdictions, there was a significant drop in the volume of controlled exports and imports, which we interpret as a loss of profitability of trade operations through lowtax jurisdictions due to increased control and an expanded list of territories through which transactions are under strict control.

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