Ukraine updates the list of jurisdictions meeting criteria under para 39.2.1.2 of the Tax Code

By:

On 7 March 2018 the Cabinet of Ministers Resolution No.108 as of 31 January 2018 (Resolution) entered into force.

The Resolution updates the List of countries which qualify for criteria envisaged by para 39.2.1.2 of the Tax Code (List), in particular by the exclusion of some countries.

A country's presence on the List means that transactions with companies which are registered in or are tax residents in such countries:

  • May be qualified as controlled transactions for transfer pricing purposes, even though such companies are not related to a Ukrainian counterparty (provided requirements as to annual income and volume of transactions are met)
  • May fall under the 30-percent limitation on deduction of expenses (as a result of adjustment that increases financial results to taxation)

The Resolution excludes Estonia, Hungary, Malta, Georgia and Latvia from the List.

Nevertheless, provided other criteria established by the Tax Code are met, transactions with companies from countries excluded from the List may still qualify as controlled ones and may be subject to the 30-percent limitation on deduction. This may be the case, for example, when a company from such a country is related to its Ukrainian counterparty or has a special organizational form.