On December 27, 2024, the Cabinet of Ministers of Ukraine approved Resolution No. 1505, which amends the list of countries and territories whose transactions with Ukrainian counterparties are subject to control under Transfer Pricing (TP) laws.
Changes to the list of jurisdictions
The update involves the exclusion of 41 countries and the inclusion of 9 new states in the list of jurisdictions subject to transfer pricing control. With this modification, the list is reduced from 78 to 46 countries and territories.
New jurisdictions included
The countries and territories added to the list are
- American Samoa
- Gua
- Democratic People’s Republic of Korea (DPRK)
- Myanma
- Namibi
- Netherlands Antilles
- Alderne
- Trinidad and Tobago
- Fiji
These inclusions are based on criteria such as membership in lists of offshore zones, inclusion in the blacklist of the Financial Action Task Force (FATF) and the lack of guarantees in the exchange of tax and financial information.
Jurisdictions excluded
The 41 countries and territories removed from the list include
- Bahrain
- Bosnia and Herzegovin
- Brunei
- Cape Verde
- Hong Kong, China
- Ireland
- Cyprus
- United Arab Emirates
- Oma
- Paraguay
The exclusion of these countries is due to the existence of international agreements with Ukraine to avoid double taxation, which facilitates the exchange of tax information and reduces the need for strict Transfer Pricing control.
Implications for taxpayers
Ukrainian companies conducting transactions with entities in the now included jurisdictions will need to comply with Transfer Pricing regulations, ensuring that transactions are conducted at arm’s length values to avoid penalties On the other hand, transactions with countries excluded from the list may be subject to lower documentation and control requirements
Validity of the resolution
Resolution No. 1505 will come into force on January 1, 2025, giving companies a short period to adjust their transfer pricing policies and procedures in accordance with the new provisions.
Frequently Asked Questions
- What criteria does Ukraine use to update the list of countries subject to transfer pricing controls?
Ukraine considers membership in lists of offshore zones, FATF blacklisting and the ability to ensure timely and complete exchange of tax and financial information.
- How does this update affect Ukrainian companies?
Companies operating with entities in the added countries will need to comply with Transfer Pricing regulations, ensuring that transactions are conducted at market values and maintaining appropriate supporting documentation
- What should companies do to adapt to these changes?
It is recommended that companies review their international operations, update their Transfer Pricing policies and consult with tax experts to ensure compliance with the new regulations.
Call to Action
At TPC Group, we have extensive experience in international Transfer Pricing advisory services. If your company has transactions with counterparties in the jurisdictions affected by this update, we offer you our support to ensure compliance with the current regulations and optimize your tax strategies. Contact us for a personalized consultation.
Source: Open 4 Business
