B a c k g r o u n d . The development of international trade and the increasing influence of transnational corporations have elevated the issue of international taxation to a new level, with transfer pricing control being one of the most pressing contemporary challenges. Conducting qualitative functional and economic analyses of controlled transactions is a crirical component of transfer pricing documentation. These analyses facilitate the accurate determination of the appropriate comparison method and enable a comprehensive comparative study regarding the compliance of prices in controlled transactions with the arm's length principle. The aim was to investigate and determine ways for enhancing both the theoretical and practical aspects of conducting functional and economic analyses of transfer pricing. M e t h o d s . The research employs the following methodologies: logical generalization is usedto identify the key aspects of conducting functional and economic analyses, assessing the necessity for comparability of the economic conditions of the parties involved in the transaction, and the issues of adjusting for country risk. Additionally, the method of analysis is utilized to evaluate the state and prospects for enhancing functional and economic analysis, review existing regulatory legal acts, research on the structure of applying transfer pricing methods. Furthemore, tabular methods and grouping techniques are employed to display generalized information on analytical aspects of functional and economic analyses and their improvement. R e s u l t s . The process of conducting a functional analysis during a comparative study has been generalized and improved, a step-by-step approach for analyzing the feasibility of applying a specific transfer pricing method has been developed, along with a test for enterprises to evaluate the applicability of the principle of grouping controlled transactions. Additionally, the importance of the geographical location of comparable companies in conducting a comparative study has been established, and strategies for further improving the functional analysis, considering the geographical location factor, have been identified.
Honchar et al. (Wed,) studied this question.