Tax authorities report on the previous TP Campaign

This week, the State Tax Service of Ukraine has released the latest statistics relating to transfer pricing (TP):

• TP tax control results, according to which, in 2022-2023, the tax authorities:
  • made 260 TP enquiries, with these totaling 860 since 2013;
  • performed 10 TP audits, with these totaling 109 since 2015, and 33 TP audits are underway, resulting in additional accrual of UAH 2.61 billion and reduction of losses by UAH 0.19 billion;
  • detected more than 492 violations—formal violations—such as non-submission or late submission of TP reports (over 1,600 cases since 2015), which entailed fines exceeding UAH 94 million.
• Self-corrections in TP documentation for both the 2022 reporting period and the previous reporting periods made by taxpayers in 2023:
  • more than 400 companies subject to TP rules, with these totaling almost 2,300, made self-corrections in 2023;
  • these companies voluntarily increased their financial result before tax by UAH 6.9 billion;
  • 55% of all self-corrections were made after receiving a request for TP documentation or for additional information on controlled transactions.

The tax authorities have noted that during their TP audits performed in the previous periods they identified so-called “red flags”, including:

• The company remains unprofitable during several consecutive periods.
• The company’s financial results are lower than the industry average.
• The company’s supply chain includes counterparties from low-tax jurisdictions.
• The company has changed its approach to the TP analysis, compared to previous periods.

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