TAX RISKS IN THE FIELD OF TRANSFER PRICING: IDENTIFICATION AND MINIMIZATION

Abstract

The article explores modern international approaches to identifying and minimizing tax risks in the field of transfer pricing. Particular attention is given to the OECD's recommendations outlined in the Country-by-Country Report: Handbook on Effective Tax Risk Assessment and the Draft Handbook on Transfer Pricing Risk Assessment. These documents provide systematic methodologies for detecting high-risk transactions based on standardized indicators and facilitate the effective classification of taxpayers according to their potential non-compliance with the arm's length principle. The study identifies three primary categories of transfer pricing risks: regular intra-group transactions, one-off high-value transactions with related parties, and transactions involving non-transparent counterparties. For each type of risk, corresponding mitigation tools are proposed, including updated benchmarking analyses, assessment of the economic substance of transactions, KYC procedures, and comprehensive documentation practices. The importance of integrating both quantitative and qualitative methods in tax risk assessment is emphasized. These include financial ratios, transactional thresholds, and the taxpayer’s compliance history. Special focus is given to the use of automated IT solutions for real-time monitoring of transfer pricing operations. Attention is also focused on the need to adapt transfer methods to the conditions of digital transformation, strengthen the regulatory environment and processes of international integration of the banking system of Ukraine. The role of the transfer system in determining the profitability of structural units, forming internal pricing policy and managing interest rate risk is determined. The article concludes that an effective transfer pricing risk management system must be based on international standards, ensure the transparency of corporate transactions, and promote active coordination between taxpayers and tax authorities. The findings can be utilized to improve Ukraine’s tax policy on transfer pricing and support the development of an efficient risk management framework in line with global best practices.