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The article examines the relationship between income distribution and the socio-economic development of the state. It is established that traditional methods of income distribution do not provide for sustainable development and do not correspond to the Constitution of Ukraine, which declares Ukraine a social state. The main regulator of income distribution is the Tax Code. Unfortunately, the current Tax Code of Ukraine does not at all provide for a fair redistribution of income and does not stimulate investment in the production sectors, but encourages the creation of various corruption schemes for evasion and avoidance of taxation, which includes a large-scale shadow economy, illegal export of capital, contraband imports and exports. The article proposes legal methods for overcoming all problems and ensuring accelerated development. To achieve these goals, legislation should contain an comprehensive list of price components. The fair market value (price) is equal to the total added value of the product or service, VAT charged on it and total depreciation at all stages of production and distribution. Added value is the sum of the company's factor incomes: wages and profits. The amount of actually paid taxes from the labor and profit fund determines the actually created added value, on which VAT is calculated, which is paid directly to the Budget at each stage of the movement of goods/services to the final consumer. The amount of added value, VAT and depreciation determines the increase in the market value of goods/services at each stage of production and distribution and corresponds to the amount of taxes, contributions and fees paid precisely by law. The distribution of income in society is determined on the basis of the European Social Charter (revised) and is ensured by the introduction of progressive tax rates on the incomes of individuals and the profits of enterprises. The income tax rate should be determined by the direction of use of profits, and the rate of distributed profit on dividends should be equal to the personal income tax rates. The zero rate does not apply to taxation of dividends.

The presence of affiliated entities in different countries and the independence of tax systems make it easy to shift profits from jurisdictions with high corporate tax rates to jurisdictions with low rates. Transfer prices and the arm's length principle are used to prevent profit shifting. The article identifies the peculiarities of transfer pricing reform in the context of the BEPS plan, analyses changes to Ukrainian legislation and opportunities for its improvement. The article analyses the amendments to the Tax Code of Ukraine aimed at ensuring the implementation of the BEPS plan. The shortcomings of these amendments are outlined and amendments are proposed to improve the legislation. The author also examines the compliance with the BEPS guiding principle, which provides for the taxation of profits where profit-generating economic activities are carried out and where value is created. It is established that the amendments to the Tax Code of Ukraine do not ensure the implementation of this principle. In addition to the problems of practical implementation of the provisions of legislation, the article identifies conceptual shortcomings of the proposed improvements to the transfer pricing methods, which practically do not ensure the achievement of the set goals. An alternative method of pricing based on the market assessment of value added, which is determined by the sum of the firm’s factor income, wages and profits, is substantiated. Instead of the concept of “transfer price”, the concept of “fair market price” is introduced, which is determined by the sum of value added, depreciation and expenses, representing the added value of all previous stages of the production and/or distribution cycles. The proposed approach excludes the concepts of “affiliated entities”, “transfer prices” and “arm’s length principle”. The existence of a unified system of value added tax in the European Union allows for the unification of the tax system in terms of direct and indirect taxes as a result of the introduction of fair market prices. Amendments to the legislation have been proposed to allow for automatic solution of the following tasks.