Tobaksgården 3
108 Stryiska Street
Tobaksgården 3
108 Stryiska Street
· Changes to the List of Low Tax Jurisdictions and the impact of such changes on the Transfer Pricing Report
· Parliament Approves Key Tax Reforms for Diia.City Startups
Changes to the List of Low Tax Jurisdictions and the impact of such changes on the Transfer Pricing Report
On Friday, December 27, 2024, the Cabinet of Ministers of Ukraine (CMU) adopted a resolution amending the appendix to the resolution dated December 27, 2017, No. 1045. This concerns the list of "low-tax jurisdictions."
The Resolution excludes 41 countries (territories) from the List, including Ireland, Republic of Cyprus, Republic of Moldova, Hong Kong, and United Arab Emirates. The new List includes 9 new countries (territories) such as American Samoa, Guam, and North Korea.
The changes came into effect on January 1, 2025, and apply to transactions with counterparties conducted from the beginning of this year. For transactions up to December 31, 2024 (inclusive), the previous version of the List applies.
Significance of the List for Transfer Pricing (TP) purposes
Transactions with counterparties from the List may be subject to the following tax rules:
These
transactions may be considered controlled for TP purposes, even if the
counterparties are not related.
The company must increase its financial result by 30% of the value of goods,
works, services, and non-current assets sold or purchased.
The company may lose part or all of the expenses related to accrued royalties.
These restrictions can be avoided if it is proven that the terms of the
transactions comply with the "arm's length" principle by preparing TP
documentation.
Parliament Approves Key Tax Reforms for Diia.City Startups
the
Verkhovna Rada approved legislation introducing changes to the tax framework
for Diia.City residents, impacting gig contracts and startup status criteria.
The reforms, set to take effect on January 1, 2025, aim to enhance the
functionality of the Diia.City regime amid Ukraine’s ongoing challenges.
Key updates include revising the startup residency requirement for Diia.City,
particularly removing the tax benefit cap for startups with fewer than nine
employees. However, startups failing to meet residency criteria by the end of
their second year must repay personal income tax (PIT) and social
contributions. This ensures compliance and minimizes abuse of benefits.
The law also exempts capital reinvestment tax on charitable aid provided by
Diia.City residents to Ukraine’s Armed Forces and removes service report
requirements for gig specialists. Additionally, it strengthens anti-residency
criteria and refines legal provisions for developing Ukraine's digital economy.
Other notable changes address taxation retroactivity for entrepreneurs (FOPs),
extend tax relief during illnesses and vacations, and revise wartime fiscal
policies, including a temporary increase in the military tax rate to 5%.
These adjustments underscore the government's commitment to fostering the
digital economy while maintaining fiscal responsibility during wartime.
