Government to reduce the number of states listed for identification of controlled transactions as part of transfer pricing (TP)

As a result of the amendments made to the Tax Code of Ukraine regarding the tax administration during martial law, the Ministry of Finance of Ukraine has issued Regulation 1505 dated 27 December 2024 to revise the List of States (Territories) the Transactions with Whose Residents are Subject to TP Control (“List 1045”). 

The number of such states (territories) has been reduced from 78 to 46 and now excludes certain states popular with Ukrainian businesses, such as Cyprus, Moldova, Ireland and UAE. At the same time, the Regulation adds 10 previously excluded states, including the states on the offshore zone list and the FATF Blacklist and the states (territories) not ensuring the timely and complete exchange of tax and financial information.

Please note that other amendments to the Tax Code of Ukraine are also effective starting from 1 January 2025 and define new criteria of related party identification based on the impact on operating conditions or economic performance (the so-called “economic related party relationship”), having a respective impact on whether transactions are defined as controlled transactions under Article 39 of the RCU starting from 1 January 2025.  

You are welcome to discuss any questions you may have regarding the new developments with our experts that are always available to provide additional information and useful advice.