GUIDELINES FOR MAKING DECISIONS ON TAX EVASION IN TRANSFER PRICING

Abstract

Transfer pricing is the most problematic in terms of tax evasion for all open economies. The possibility of artificially reducing the object of corporate taxation (corporate income tax) through transactions with related parties and with non-residents or branches in other jurisdictions is often used by business entities in different countries. Ukraine is no exception. Tax evasion through transfer pricing was observed even before the full-scale invasion of Ukraine by the russian federation, and with the moratorium on tax audits during the war, the risk of an increase in their volume has increased dramatically. Research in this area is necessary to prevent criminal acts in the field of taxation, especially given the critical shortage of funds in the state budget. The problem of transfer pricing in Ukraine from the perspective of tax evasion is considered in the article. The definition of transfer prices is provided. The impossibility of avoiding transfer pricing due to economic, structural and organizational reasons for doing business is considered. A review of the national legislation on transfer pricing regulation is made. The concept of controlled transactions is defined. The criteria for related parties according to the Tax Code of Ukraine are described. The authors focuses on the subjective factors of making a decision on tax evasion in transactions with related parties. The grouping of controlled transactions in accordance with the national legislation is provided. Additional conditions for recognizing transactions as controlled are assessed through the prism of the possibility of applying these conditions to avoid tax control measures. This research paper emphasizes that decisionmaking on tax evasion is based on the quality of control measures and tax control possibilities. Massive tax deviations of big business and growing opportunities for establishing foreign economic operations make it necessary to return to the practice of transfer pricing audits. In order to improve the quality of such audits, it is necessary for the tax service of Ukraine to join the system of automatic exchange of tax information between other countries.