Ukraine changed definition of "low-tax jurisdiction" for transfer pricing purposes

Ukraine changed definition of "low-tax jurisdiction" for transfer pricing purposes

On 12 November 2013 Law from 24.10.2013 г. № 657-VІІ “On Changes to the Tax Code of Ukraine in respect of recording and registering taxpayers and improving certain provisions” that changed the definition of a "low tax jurisdiction" for transfer pricing purposes (identifying controlled transactions), has been published in the official gazette «Golos Ukrainy», the issue № 212. The list of the low tax jurisdictions will be set by the Cabinet of Ministers of Ukraine.

Now a "low tax jurisdiction" will be a jurisdiction that has a corporate tax rate that is five (5) percentage points below the Ukrainian tax rate, i.e. 14% and less in 2013, and in 2014 - 11% and less (under XX.4.10. of the Ukraine’s Tax Code it is provided that starting from 1 January 2014 the corporate tax rate to be reduce from 19% to 16%).

The main intrigue now is whether Ukraine takes into account the recommendation of the International Monetary Fund to postpone the scheduled corporate tax rate reduction.

 

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