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Transfer pricing and customs valuation: differences and avoiding potential risks


  • O. Bulana


Tax issues pertaining to cross-border trade in goods between related parties (i.e., companies from the same group) represent a major challenge for many national tax and customs administrations. One of the biggest concerns is how to determine the fair market price for such operations. The methodology for determining the tax base depends on the type of tax concerned - i.e., transfer pricing methods for corporate income tax and customs valuation methods for indirect taxes. The two approaches have considerable differences, that may result in negative implications for the fiscal authorities (tax evasion) and taxpayers (disputes with the fiscal authorities, overpaid tax). The article highlights the main differences between the methods of transfer pricing and customs valuation. The author analyzes the recent Ukrainian legal changes pertaining to control over transfer pricing. The author describes potential risks for taxpayers and the areas that require settlement by the customs authorities in relation with the new transfer pricing regulations in Ukraine. The main achievement of this research is development of recommendations for harmonization of transfer pricing and customs valuation in Ukraine, inter alia considering international best practices.

Suggested Citation

  • O. Bulana, 2015. "Transfer pricing and customs valuation: differences and avoiding potential risks," Economy and Forecasting, Valeriy Heyets, issue 2, pages 59-71.
  • Handle: RePEc:eip:journl:y:2015:i:2:p:59-71

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