• Українською
  • russian federation included in the EU blacklist for tax purposes
    Ministry of Finance of Ukraine, posted 16 February 2023 10:47

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

    Along with the russian federation, the EU Black List includes American Samoa, Anguilla, the Bahamas, the British Virgin Islands, Costa Rica, Fiji, Guam, the Marshall Islands, Palau, Panama, Samoa, Trinidad and Tobago, the Turks and Caicos Islands, the US Virgin Islands and Vanuatu.

    It should be noted that the EU Black List includes jurisdictions that have not implemented the EU recommendations on tax transparency, fair taxation and the OECD minimum standards for combating tax base erosion and profit shifting (anti-BEPS).

    The inclusion of a jurisdiction in the EU Black List means that EU member states may apply tax and non-tax "safeguard measures" in transactions with jurisdictions on the list.

    The tax "protective measures" include:

    - the inability to deduct expenses incurred in a jurisdiction on the list;

    - Controlled Foreign Company (CFC) rules to limit artificial tax deferral for offshore companies and companies from low-tax jurisdictions;

    - withholding tax (WHT) to eliminate improper exemption or reimbursement;

    - limiting the tax exemption for shareholder dividends.

    The application of non-tax measures is evidenced by the fact that certain EU financing rules now explicitly refer to the list, and funds from certain EU financial instruments cannot be channelled through entities in the countries on the list.

    It should be noted that the Ministry of Finance of Ukraine also calls on the Financial Action Task Force (FATF) to remove russia from the list of FATF member states and blacklist it as a high-risk jurisdiction at the plenary session and working group meetings to be held in Paris on February 20-24.

    Blacklisting the country will require all countries of the world, including FATF members, to apply enhanced due diligence and implement countermeasures to protect the international financial system from the ongoing risks posed by russia.

    Background

    The Economic and Financial Affairs Council (ECOFIN) is a council responsible for managing the European Union's policies in four important areas: economic policy, taxation, regulation and supervision of financial services.