DETERMINATION OF DIFFERENCES BETWEEN TAX AUDIT AND INTERNAL AUDIT OF TRANSFER PRICES DURING FOREIGN ECONOMIC ACTIVITIES OF RELATED PARTIES

Abstract

The purpose of the article is to identify the differences between the tax and internal audit of transfer prices during the foreign trade activities of the related enterprises. Globalization processes lead to the expansion of transnational corporations and the intensification of foreign economic transactions between related companies. In these conditions, using of international requirements for tax control of transfer prices in transactions between related companies formed new methodical peculiarities of conducting external tax and internal corporate audit of transfer pricing in Ukraine. The article identifies the tax and corporate risks that may arise in the case of non-compliance of prices with the principle of «extended hand» or corporate requirements of a group of companies, which is conditioned by a specific process for the implementation of controlled foreign economic transactions between affiliated enterprises. The decomposition of internal and tax audit of transfer prices has been proposed, which made it possible to determine the fundamental differences between these two types of audit. It was concluded that the tax and management audit of transfer pricing varies depending on the type of foreign economic transaction (export, import). The scope of the tax audit includes checking the conformity of export transactions with the subject of undercutting the transaction price (underestimation of income and tax base), and import transactions - to overestimate the price of the transaction (over-expenditure and undertaxation of the tax base). An analysis of the information needs for using the methods of transfer pricing methods has been made to ensure the compliance of the indicators of the report on controlled transactions for the purposes of external tax audit.