On 30 October 2019, the Parliament of Ukraine ratified Protocols amending double taxation treaties with the United Kingdom and Cyprus.
The Protocol on amendments to the Agreement on the Avoidance of Double Taxation between Ukraine and the United Kingdom, signed on 9 October 2017, provides for:
- an increase in the withholding tax rate for dividends from 10 to 15 per cent.;
- an increase of the withholding tax rate for interest and royalty payments from zero to 5 per cent.; and
- new provisions concerning the exchange of fiscal information, which should broaden the possibilities for such exchanges.
The Protocol on amendments to the Agreement on the Avoidance of Double Taxation between Ukraine and Cyprus was signed on 11 December 2015 and later ratified by Cyprus. It provides for:
- a decrease in the withholding tax rate for dividends from 15 to 10 per cent., if the company paying dividends does not qualify for a lower rate;
- amended conditions for application of the 5 per cent. rate– as well as capital being not less than 20 per cent., it is also required that the value of investment (direct or indirect) should be at least EUR 100,000;
- an increase of the withholding tax rate for interest payments, from 2 to 5 per cent.; and
- new provisions on the taxation of capital gains derived from the alienation of shares.
The amendments contemplated by the said Protocols will become effective following the notification by each party to the other of the completion of the relevant internal state procedures for ratification of the Protocol by each state. We will continue to monitor the effectiveness of the Protocols and provide further information when available.
Please also note that the Double Tax Treaty between Malaysia and Ukraine, signed in 2016, has been ratified by the Ukrainian Parliament. The qualified withholding tax rates are:
- for dividends, 5 per cent. if the shareholding in the capital of the company paying the dividends is at least 20 per cent., otherwise – 15 per cent.;
- for interest – 10 per cent.;
- for royalties – 8 per cent.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.