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Transfer Pricing Penalties - 2018

Author: Yuriy Shchyrin
Date of publication: 16.07.2018

The matter associated with tax returns gains even more relevance, whenever the end of the reporting period is around the corner. So, what are the PENALTIES for the failure to submit or untimely/incomplete submission of Controlled Transactions Report and required transfer pricing (TP) documentation?

The rules for report and transfer pricing documentation preparation are ever-changing. Every single year, the norms of the Tax Code of Ukraine are brought even more in line with requirements stipulated by the OECD and the best practices. Within this context, legislative changes and increased control over implementation of controlled transactions create major problems which arise in the course of tax return submission. The taxpayers have to be very well-informed and diligent.

Let it be recalled that the Law of Ukraine No.2245-VIII dated on January 7, 2017 “On Amendments to the Tax Code of Ukraine and Certain Legislative Acts of Ukraine on Balancing Budget Revenues” became effective on January 1, 2018.

Price of the Violations Made When Submitting Transfer Pricing Reports

Transfer pricing is a compelling topic for judicial practice. Mistakes made in Controlled Transactions Report, failure to timely submit tax returns on transfer pricing or incomplete submission thereof involve liability and penalties which can be pretty considerable.

Penalties for failure to submit/untimely submission of Controlled Transactions Report or necessary transfer pricing documentation by the taxpayer or their non-conformity to the number of controlled transactions shall be determined pursuant to the Articles 120.3 and 120.4 of the Tax Code of Ukraine.



For failure to submit Controlled Transactions Report and/or transfer pricing documentation or failure to include all required controlled transactions (Par. 39.4), a financial penalty amounting up to 300 minimum living wages (UAH 552,300) may be imposed.

In such event, the taxpayer shall not be disobliged from submitting relevant reports and documentation.


Should the taxpayer fail to submit the Transfer Pricing Report and/or transfer pricing documentation even after 30 days following the deadline for the payment of the penalty (Par.39.4), the penalty shall amount to 5 sizes of the minimum living wage (UAH 9,205) for each calendar day of failure to provide mentioned documents.



Failure to timely submit the transfer pricing report and documentation or untimely reporting on controlled transactions in the submitted report pursuant to the Code (Par.39.4) shall be punishable by penalty(-ies) amounting to no more than 300 minimum living wages (UAH 552,300).

Given the changes made by Law No.1797, the taxpayers who performed controlled transactions shall prepare and submit the Controlled Transactions Report to the State Fiscal Service of Ukraine on the yearly basis by October 1 of the year following the reporting year.

The final day for submission of reports in 2018 (September 30, 2018) falls on a weekend, namely Sunday. Pursuant to Par.3, Section 1, Procedure No.8, the next day following the public holiday (weekend) shall be deemed the final day of the deadline. Under all circumstances, the taxpayers shall submit reports no later than October 1, 2018.

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