12:25 28.12.2017

Ukraine expands list of countries for transfer pricing monitoring to 85

3 min read
Ukraine expands list of countries for transfer pricing monitoring to 85

The government of Ukraine has included Estonia, Iran, Cuba, Laos, Latvia, Lebanon, Malta, Morocco, Monaco, the United Arab Emirates, Singapore, Georgia and Hungary in the list of countries whose transactions with contractors are subject to control under the Transfer Pricing Law.

The list also included Guadeloupe, Guatemala, French Guiana, the Commonwealth of Dominica, the Dominican Republic, Mauritius, the Independent State of Samoa, the Ukrainian Finance Ministry said on its website.

The total number of the countries for the monitoring increased from 65 to 85.

The ministry explained that the enlargement of the list is connected with changes in the criteria for its formation. The list was compiled of states (territories) where the corporate profit tax rate is five or more percentage points lower than in Ukraine (that is, below 13%); states with which Ukraine has not yet agreed on exchange of information, and states whose authorities do not provide fiscal information to the Ukrainian state fiscal service on time and in full.

"When considering the criterion for the corporate profit tax rate, which is five or more percentage points lower than that in Ukraine, we took into account not only the basic rate, but also reduced rates for individual industries, territories, and types of activity," the ministry explained.

The new regulation shall enter into force as of January 1, 2018.

The ministry reminds that transactions with a contractor registered in the state from this list are recognized as controlled for the purposes of transfer pricing from January 1 of the reporting year following the calendar year when the states were included in this list, and reports on them should be submitted to the regulatory agencies

As reported, under the law on amendments to the Tax Code of Ukraine on transfer pricing, the transfer pricing rules are applicable to controlled transactions with residents of low-tax jurisdictions (where the profit tax rate is lower than the Ukrainian rate by 5 p.p. and more) as of September 1, 2013.

In the middle of May 2015, the Cabinet of Ministers added Austria, Turkmenistan, the Special Administrative Region of China, Hong Kong, and Niue in the list of countries whose transactions are subject to transfer pricing control, but at the same time it excluded Albania. However, on August 1, 2015, it deleted Austria after it had sent a note, and the total number of the countries (territories) on the list fell to 75.

Then in September 2016, the government excluded 10 states (territories) from the list: Switzerland, Georgia, Malta, Lebanon, the United Arab Emirates, Singapore and Morocco, Luxembourg, Jamaica, and Guadeloupe.

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