Transfer pricing (TP) in Ukraine is a key element of tax planning for the companies with international operations.
The primary objective of transfer pricing is to ensure that the prices for goods, services or other transactions are at the level determined by free market conditions. This prevents price manipulation that could be used for tax evasion or profit shifting to jurisdictions with low tax rates.
In December 2024, the Cabinet of Ministers of Ukraine adopted Resolution No. 1505 on significant issues that directly impact international transactions and tax policy of companies. The primary changes include an updated list of low-tax jurisdictions, which is essential for effective planning of transactions with residents in such jurisdictions.
In accordance with the provisions of Law No. 3813-IX “On Amendments to the Tax Code of Ukraine on Peculiarities of Tax Administration during Martial Law for Taxpayers with a High Level of Voluntary Compliance with Tax Law”, as a result of the list reformed , the number of jurisdictions was reduced from 78 to 46, most of which are classic offshore and low-tax jurisdictions.
Removed from the list
- Among others, Cyprus, Ireland, Moldova, Hong Kong
- countries with which Ukraine has concluded international treaties for the avoidance of double taxation.
New states are included:
- countries included in the list of offshore zones, as approved by the Cabinet of Ministers of Ukraine on February 23, 2011 No. 143-p
- countries blacklisted by FATF (Financial Action Task Force)
- states (territories) that do not ensure timely and complete exchange of tax and financial information.
However, the effective date of the updated list remains uncertain: either from the beginning of 2025, or from 2026 (since according to sub-clause 39.2.1.2 of the Tax Code of Ukraine “In case of approval of changes to the said list after November 30, such changes shall apply from January 1 of the second reporting year following the calendar year in which such changes were made.”). As the timing of the implementation of the changes has not yet been clarified, companies are currently awaiting official clarifications from the State Tax Service of Ukraine to help determine the exact application date of the new rules.
The team of BDO in Ukraine advises companies to closely monitor changes in legislation and adjust their transfer pricing approaches in a timely manner. Our experts are ready to assist you in this process. Given the complexity and constant evolution of TP requirements, it is critical to seek advice from experienced professionals to avoid mistakes.
For expert advice and professional assistance in the field of transfer pricing, please contact BDO in Ukraine. Our team is dedicated to providing the best solutions for your business.
