2023-02-16T11:16:00+02:00 Politics 2024-09-15T05:52:54+03:00

Ukrainian news

EU Council puts RF on EU Blacklist for tax purposes

EU Council puts RF on EU Blacklist for tax purposes

The Ministry of Finance of Ukraine welcomes the decision of the Economic and Financial Affairs Council of the European Union (ECOFIN) to add the Russian Federation to the list of jurisdictions that do not cooperate with the EU for tax purposes (EU Blacklist).

This follows from a statement by the Ministry of Finance, the Ukrainian News agency reports.

Together with the Russian Federation, American Samoa, Anguilla, Bahamas, British Virgin Islands, Costa Rica, Fiji, Guam, Marshall Islands, Palau, Panama, Samoa, Trinidad and Tobago, Turks and Caicos Islands, US Virgin Islands and Vanuatu.

Jurisdictions that have failed to comply with EU recommendations on tax transparency, fair taxation and OECD minimum standards for combating base erosion and tax profit avoidance (anti-BEPS) are included in the EU Blacklist.

The entry of a jurisdiction into the EU Blacklist means that EU member states can apply tax and non-tax protection measures in transactions with jurisdictions from the specified list.

Tax protection measures include:

- impossibility of deducting expenses incurred in the jurisdiction from the list;

- controlled foreign company (CFC) rules to limit artificial tax deferral for offshore companies, companies from low-tax jurisdictions;

  - withholding tax (WHT) to eliminate inappropriate tax exemptions or refunds;

- limitation of exemption from taxation of shareholders' dividends.

As evidenced by the application of non-tax measures, certain EU funding rules now directly refer to the list, and funds from some EU financial instruments cannot be channeled through companies in countries on the list.

The Ministry of Finance of Ukraine also calls on the International Anti-Money Laundering Group (Financial Action Task Force - FATF) to exclude Russia from the list of FATF member countries and blacklist it as a jurisdiction with a high level of risk at the upcoming plenary and working group meetings in Paris on February 20-24.

Blacklisting the country would require all countries in the world, including FATF member countries, to apply enhanced due diligence and implement countermeasures to protect the international financial system from the ongoing risks posed by Russia.

As the Ukrainian News agency earlier reported, the ECOFIN is a council aimed at managing the European Union's policy in four important areas, such as economic policy, taxation, regulation and supervision of financial services.