Credit note from a non-resident: how a discount may affect corporate income tax

On 25 August, the State Tax Service of Ukraine published guidance on a situation in which a Ukrainian company purchases goods from a non-resident throughout the year and, at year-end, receives a credit note from that supplier—effectively, a discount on the purchase price of the goods.

At first glance, the situation appears straightforward: the supplier grants a discount, so the company pays less.

However, where the transaction is controlled, such a discount also has tax consequences.

The State Tax Service expressly states that, for the purposes of applying subparagraph 140.5.2 of the Tax Code of Ukraine, the price of a controlled transaction must be determined taking into account the credit note received.

Why does this matter?

In controlled transactions with non-residents, a company must verify that the price complies with the arm’s-length principle.

If the contractual value of purchased goods exceeds the price determined under that principle, the Tax Code provides for a corresponding increase in the financial result before tax.

A credit note may change precisely the price on which that calculation is based.

Moreover, the State Tax Service separately clarifies that the total value of such a transaction in the Controlled Transactions Report must also be reported with the credit note taken into account, in accordance with the taxpayer’s accounting records.

Therefore, for companies dealing with non-residents, a credit note is not merely an accounting document confirming a discount.

This is particularly important when substantial import volumes, related non-residents, retroactive bonuses, or other year-end price adjustments are involved.

A discount received today may change the transaction’s tax result at the end of the year.

For this reason, the terms governing credit notes, bonuses, and retrospective discounts should be reviewed not after receiving an inquiry from the State Tax Service, but at the stage of structuring foreign economic contracts and preparing transfer-pricing documentation.

Primary source: State Tax Service of Ukraine, 25 August 2026.

WINNER Law Firm advises on foreign economic transactions, international tax structuring, and transfer-pricing matters, and represents businesses during tax audits and disputes with the State Tax Service.

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Author: Ihor Yasko, Managing Partner of WINNER Law Firm, PhD in Law.