The Government has adopted the list of countries (territories) whose residents make business transactions subject to transfer pricing control

Today, the Government has approved the new list of countries (territories) whose residents make business transactions subject to transfer pricing control.

What’s it about?

Due to changes in the list criteria, the Ministry of Finance prepared a new list of territories (territories) whose residents make business transactions subject to state control.

The new list is based on the following criteria:
- countries (territories) where the corporate profit tax rate is at least by 5% lower than in Ukraine (i.e., lower than 13%);
- countries which do not have agreements with Ukraine on information exchange;
- countries whose authorities do not ensure timely and comprehensive exchange of tax and financial data requested by the SFS.

In regard to the tax rate criterion, not only the general rate, but also preferential tax rates for selected branches, territories and business activities are taken into account.
Transactions with agents registered in a country (territory) included in the list, are subject to transfer pricing control starting from January 1 of the reporting year following the calendar year in which this country (territory) was included in the list. These transactions shall be reported to the responsible authorities.

The new list includes 85 countries (territories).

Compared to the previous list, the following countries (territories) were added: Guadalupe, Guatemala, French Guiana, Commonwealth of Dominica, Dominican Republic, Estonia, Iran, Cuba, Laos, Latvia, Lebanon, Mauritius, Malta, Morocco, Monaco, UAE, Singapore, Georgia, and Hungary.

What are the benefits?

• the decision helps prevent tax evasion and tax-base erosion;
• corporate profits are subject to taxation in their respective origin countries, which makes it possible to increase revenues for the state budget of Ukraine.