The Cabinet of Ministers of Ukraine has removed Estonia, Latvia, Georgia, Malta and Hungary from the list of countries transactions with residents of which are supervised by Ukraine for transfer pricing purposes after protests of Estonia and Latvia.

Ukrainian Finance Minister Oleksandr Danyliuk said that the decision made in December to place the countries to the list was made without approving this step with the partner countries, and now the government and the Finance Ministry will take two months for consultations.

"In some countries there are requirements in their legislation saying that money from Ukraine can be removed at a zero rate," the finance minister said.

As reported, in late 2017, the Ukrainian government included Estonia, Latvia, Iran, Cuba, Laos, Lebanon, Malta, Morocco, Monaco, the UAE, Singapore, Georgia and Hungary in the list of countries 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, and the Independent State of Samoa. The total number of countries 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.

The decision became effective on January 1, 2018 and aroused protests of Latvia and Lithuania, which have the law on tax on removed capital instead of the law on profit tax.