Government 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.