On December 27, 2024, the Council of Ministers of Ukraine approved Resolution No. 1505, which amends the list of countries and territories whose transactions with Ukrainian counterparties are subject to Transfer Pricing (TP) laws.
Amendments to the List of Jurisdictions
The update entails excluding 41 countries and adding nine new states to the list of jurisdictions subject to Transfer Pricing control. This amendment reduces the list from 78 to 46 countries and territories.
New Jurisdictions Included
The countries and territories added to the list are:
- American Samoa
- Guam
- Democratic People’s Republic of Korea (DPRK)
- Myanmar
- Namibia
- Netherlands Antilles
- Alderney
- Trinidad and Tobago
- Fiji
These inclusions are based on criteria such as membership in lists of offshore locations, blacklisting by the Financial Action Task Force (FATF), and lack of guarantees in the exchange of tax and financial information.
Jurisdictions Excluded
Among the 41 countries and territories removed from the list are:
- Bahrain
- Bosnia and Herzegovina
- Brunei
- Cape Verde
- Hong Kong (China)
- Ireland
- Cyprus
- United Arab Emirates
- Oman
- 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 controls.
Implications for Taxpayers
Ukrainian companies performing transactions with entities in these included jurisdictions must comply with Transfer Pricing regulations, ensuring that transactions are carried out at market values to avoid penalties. On the other hand, transactions with these excluded countries may be subject to lower documentation and control requirements.
Resolution Effectiveness
Resolution No. 1505 will come into force on January 1, 2025, granting companies a brief period to adjust their Transfer Pricing policies and procedures according to the new provisions.
Frequent Questions
- What are the criteria of Ukraine to update the list of countries subject to Transfer Pricing control? Ukraine considers membership in lists of offshore locations, 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 must comply with Transfer Pricing regulations, ensuring that transactions are at market values and maintaining appropriate supporting documentation.
- What should companies do to adapt to these amendments? Companies should 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 wide experience in international Transfer Pricing advice. If your company is operating 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 customized consultation.
Source: Open 4 Business
