Ukrainian Cabinet of Ministers adopted a procedure that allows signing advance transfer pricing agreements with Ukrainian tax authorities. The Cabinet of Ministers also approved a form of such agreement. Under this procedure a Ukrainian taxpayer may negotiate with a tax authority (i) the method and (ii) the official source of information (e.g., price listing, etc.) to be applied by the tax authority to determine a fair market price of goods and services sold by this taxpayer. The procedure implies only bilateral agreements (i.e., between the tax authority and the Ukrainian taxpayer, but not the group of companies).

The taxpayer's benefit here is the clarity on the method and source of information that will be used by the tax authority during tax audit to establish the fair market price and, respectively, to check whether tax liabilities have been assessed correctly. This clarity is essential taken into account that tax authorities will be able to use different methods and various information sources.

This procedure will be effective starting from 1 January 2013. It will apply only to legal entities whose income for the last consecutive four quarters exceeded UAH 500 mil. (approx. USD 62.5 mil.) or tax payments were more than UAH 12 mil. (approx. USD 1.5 mil.)