​Ukraine did not put Estonia on the list of offshore jurisdictions, says Oleksandr Danyliuk

Apart from participating in the meetings of the Ukrainian delegation in Davos led by President Petro Poroshenko, Minister of Finance Oleksandr Danyliuk also met EU Commissioner Pierre Moscovici, Prime Minister of Estonia Juri Ratas and Minister of Finance of the Netherlands Wopke Hoekstra.

On January 24, Minister of Finance Oleksandr Danyliuk met Pierre Moscovici, EU Commissioner for economic and financial affairs, taxation and customs.
The key points of the meeting were macro-financial assistance to Ukraine by the EU and further implementation of reforms in Ukraine.

Pierre Moscovici pointed out that the European Commission continues to support Ukraine in its efforts to implement qualitative changes and important reforms including the reform of the State Fiscal Service and the overall simplification of the tax system.

The parties discussed further steps regarding the new program of macro-financial assistance and agreed to finalize the program terms soon.

In the end of the meeting, Oleksandr Danyliuk thanked Pierre Moscovici for the support and for the extended capacities of the Europen Investment Bank in Ukraine.

On January 25, Oleksandr Danyliuk met Prime Minister of Estonia Juri Ratas.

The parties discussed the progress of the economic reforms in Ukraine and cooperation between the two countries. Another point on the agenda was the inclusion of Estonia, along with several other countries where the profit tax is lower than in Ukraine or the tax on distributed capital is applied, into the list of countries (territories) whose residents involved in business transactions with Ukrainian partners make these transactions subject to control in terms of funds transfer pricing (FTP).

“It’s not about the “list of offshore jurisdictions”. It’s about the list of countries whose residents make business transactions with their involvement subject to FTP control. It would be a mistake to consider them as identical”, Oleksandr Danyliuk said during the meeting.

“There are differences in tax rates of different countries, and we control business transactions between Ukrainian residents and countries where these rates are lower. We do this, in order to prevent manipulations and tax evasion. Taxes must be paid in the jurisdiction where they are generated, that’s we need additional tax control mechanisms. This is what we aspire for as part of the BEPS action plan (Base erosion and Profit Shifting). This is also important as part of our efforts to ensure revenues for the state budget”, Oleksandr Danyliuk said.

Oleksandr Danyliuk and Juri Ratas agreed that their countries will continue their talks to find an appropriate solution to this issue. It is also important for Ukraine both to fulfill its commitments related to BEPS including prevention of manipulations and tax evasion and to preserve productive economic cooperation with the traditional partners of Ukraine.

Oleksandr Danyliuk added that negotiations are also under way with Latvia where the tax on distributed capital was enacted as well.

Ukraine is going to replace the corporate profit tax with the tax on distributed capital too. The Government has already approved the draft law prepared by the Ministry of Finance and sent it for examination to the National Council for Reforms. Hence, the parties also discussed the specifics of this tax, its influence on economic development and cooperation – following the BEPS rules – with countries which do not plan to implement the tax on distributed capital.

On January 25, Oleksandr Danyliuk also met Minister of Finance of the Netherlands Wopke Hoekstra.

The ministers discussed planned amendments to the Agreement on the avoidance of double taxation between Ukraine and the Netherlands. Wopke Hoekstra informed that the Netherlands are going to adopt the corresponding decision soon.

The parties also mentioned the progress in cooperation between Ukraine and the IMF and agreed that Ukraine must continue its crucial reforms to achieve sustainable economic growth.

Oleksandr Danyliuk thanked his colleague for the support provided to Ukraine in the group of the member states of the IMF and the World Bank chaired by the Netherlands, whose member Ukraine is.