New Transfer Pricing Penalties: What Will Change for Businesses Starting March 25, 2025?
As of March 25, 2025, amendments to the Tax Code of Ukraine introduced by Law No. 4112-IX have officially come into effect. These changes significantly impact taxpayer liability in the area of transfer pricing (TP) — particularly regarding submission and timely submission of documentation and notifications.
These updates are relevant not only for large multinational groups, but also for medium-sized businesses engaged in controlled transactions with non-residents.
1. Increased Penalty for Failure to Submit the Notification on Participation in an MNE Group
Let’s start with the key change: the penalty has doubled.
- Failure to submit the Notification on participation in a multinational enterprise (MNE) group — 100 subsistence minimums (previously — 50).
- For each day of delay — 1 minimum, capped at 50 subsistence minimums (previously — up to 100).
These fines can seriously affect businesses that do not regularly monitor their TP obligations.
2. New Penalty Mechanism for Late Submission of the Controlled Transactions Report
Another important update is the new approach to calculating late filing penalties for TP reports:
- The penalty is 1 subsistence minimum per day of delay,
- But capped at the lower of:
- 300 subsistence minimums, or
- 0.5% of the total value of unreported controlled transactions.
This change benefits compliant taxpayers who correct even minor errors. Previously, such corrections could lead to disproportionately high fines.
3. New Principle for Penalties Imposed After TP Audits
Take note of this key amendment:
Penalties resulting from audits are now applied at the rates in effect on the date the tax authority issues the penalty decision.
This means that if a violation occurred under the “old” rules, but the decision is made after March 25, 2025, the new penalty rules will apply.
⚖️ What Does This Mean for Businesses?
This reform signals increased scrutiny by the tax authority, especially for companies within MNE groups or engaged in cross-border transactions.
However, the new penalty system is less punitive in cases where companies voluntarily correct minor mistakes — offering relief from previously excessive financial pressure.
✅ How to Minimize Risks?
- Conduct a TP compliance audit for recent years.
- Verify that your MNE group notification was submitted properly.
- If needed, amend your TP report before it triggers an audit.
Prepare now — in line with updated thresholds and deadlines.
