The government of Ukraine has included Estonia, Iran, Cuba, Latvia, Laos, Lebanon, Malta, Monaco, Morocco, the United Arab Emirates, Singapore, Georgia and Hungary in the list of countries whose transactions with contractors are subject to monitoring under the Transfer Pricing Law, the Finance Ministry of Ukraine said on its website.
The total number of countries grew from 65 to 85 and it now also includes such countries as Guadeloupe, Guatemala, French Guiana, the Commonwealth of Dominica, the Dominican Republic, Mauritius and Independent State of Samoa.
The ministry explained that the enlargement of the list is related to changes in the criteria for its formation. The list was formed of states and territories where corporate profit tax rate is at least 5% lower than in Ukraine (below 13%), states that Ukraine has not signed an agreement on exchange of information, and states whose governments do not offer fiscal information to the Ukrainian fiscal service on time and in full.
“While considering the criterion of corporate profit tax rate that is at least 5% lower than that in Ukraine, we took into account not only the basic rate, but also reduced rates for specific industries, particular territories and types of businesses,” the ministry explained. The updated list will come into force on 1 January 2018.
Transactions with a contractor who is registered in a country or territory from this list are recognized as under control for the purposes of transfer pricing from 1 January of the reporting year following the calendar year when the state was included in the list.
Under the law on amendments to the Tax Code of Ukraine regarding transfer pricing, such regulations are to be applied to monitored transactions with residents of low-tax jurisdictions (where corporate profit tax rate is at least 5% lower than the Ukrainian rate), as of 1 September 2013.
