The russian federation was added to the "EU Blacklist" for tax purposes

The Ministry of Finance of Ukraine welcomes the decision of the Economic and Financial Affairs Council of the European Union (ECOFIN) to include the russian federation in the EU list of non-cooperative jurisdictions for tax purposes ("EU Black List").

Along with the russian federation, American Samoa, Anguilla, Bahamas, British Virgin Islands, Costa Rica, Fiji, Guam, Marshall Islands, Palau, Panama, Samoa, Trinidad and Tobago, Turks and Caicos Islands, Virgin Islands USA and Vanuatu are presented in the list.

It should be noted that the "EU Black List" includes jurisdictions that have failed to comply with the EU's recommendations on tax transparency, fair taxation and the OECD's minimum anti-base erosion and profit shifting (anti-BEPS) standards.

The entry of a jurisdiction into the "EU Black List" means that EU member states can apply tax and non-tax "defensive measures" in transactions with jurisdictions from the specified list.

Tax "defensive measures" include:

• non-deductibility of costs incurred in a listed jurisdiction;
• controlled foreign company (CFC) rules, to limit artificial deferral of tax to offshore  entities, entities from the low tax jurisdictions;
• withholding tax measures (WHT), to tackle improper exemptions or refunds;
• limitation of the participation exemption on shareholder dividends.

As evidenced by the application of non-tax measures, certain EU funding rules now explicitly refer to the list. Funds from several EU instruments cannot be channeled through entities in the listed countries.

As was previously reported, the Ministry of Finance of Ukraine urges the Financial Action Task Force (FATF) to exclude the russian federation from the list of FATF member countries, and to place it on the Blacklist as a high-risk jurisdiction at its plenary and working group meetings, which take place in Paris on 20-24 February.

This will require all countries worldwide, including FATF member states, to apply enhanced due diligence and implement counter-measures to protect the international financial system from the ongoing risks emanating from the russian federation.

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The Economic and Financial Affairs Council (ECOFIN) is a council aimed at managing the policies of the European Union in four important areas, such as economic policy, taxation, regulation and financial services supervision.