WORLD TRANSITION ECONOMY RESEARCH Transfer Pricing in Transition Economies: Evidence from Ukraine Alexander Rogach Æ Tetyana Balyuk Received: 11 November 2008 / Accepted: 7 January 2009 / Published online: 18 February 2009 Ó Springer-Verlag 2009 Abstract Faced with possibilities and challenges of doing business under different regulatory regimes, transnational corporations have developed a number of transfer mechanisms to take advantage of profit maximization opportunities. Transfer pricing is a transfer mechanism widely used by transnational corporations. Implications of transfer pricing for profitability and the need for transfer pricing regulation are well understood by national governments, which is reflected in the fact that more than 60 governments have introduced some form of transfer pricing controls. Transfer pricing is a challenging issue for transition economies as their transfer pricing regulatory systems are less mature than those of developed countries. The authors have initiated an empirical study on transfer pricing strategies in the Ukrainian market. In addition, the national regulatory regime for transfer pricing was evaluated compared to inter- national best practices. This article is an attempt to draw attention of the research community and Ukrainian policy-makers to transfer pricing issues in Ukraine. Keywords Arm’s length principle Á Profit-shifting risk Á Tax legislation Á Ukraine Á Transfer pricing JEL Classification F23 Introduction Transnational corporations (TNCs) headquartered in some of the most advanced economies of the world have always been pioneers in adapting to rapidly changing A. Rogach (&) Á T. Balyuk International Finance Department, Institute of International Relations, Kyiv National Taras Shevchenko University, Kiev, Ukraine e-mail: alex_rogach@ukr.net T. Balyuk e-mail: tanya.balyuk@mail.com 123 Transit Stud Rev (2009) 16:20–33 DOI 10.1007/s11300-009-0049-2