Double tax treaties are signed between countries in order to avoid the double taxation of profits and incomes in the country of origin and in Ukraine. These measures are taken by this country especially in order to attract foreign investments and protect the interests of the foreign entrepreneurs. The characteristics of the double tax treaties are that the profits are taxed only in the country of origin or if are taxed in Ukraine, refunds are offered on the paid amounts. The corporate tax is usually 21% but using the provisions of the treaties is exempting the foreign companies from paying it. Our lawyers are at your disposal with various services, inlcuding assistance in gaining permanent residence in Ukraine.
Besides this, smaller or inexistent withholding taxes on dividends, royalties and interests are granted. The usual Ukrainian withholding tax on dividends, royalties and interests paid to non-residents is 15%.
In order to beneficiate from these provisions, the claimant must provide a valid tax certificate from the foreign tax authority. In this certificate, there must be stipulated that the individual or corporate body is already paying taxes in the country of residence.
So far, Ukraine has signed double tax treaties with : Algeria, Armenia, Austria, Azerbaijan, Belarus, Belgium, Brazil, Bulgaria, Canada, China, Croatia, Cyprus, Czech republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Indonesia, Iran, Israel, Italy, Japan, Jordan, Kazakhstan, Korea, Kuwait, Kyrgyz Republic, Libya, Latvia, Lebanon, Lithuania, Macedonia, Malaysia, Moldova, Mongolia, Montenegro, Morocco, Netherlands, Norway, Pakistan, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Syria, Tajikistan, Thailand, Turkey, Turkmenistan, United Arab Emirates, United Kingdom, United States of America, Uzbekistan and Vietnam.
In the above conditions, tax frauds may occur. In order to avoid the entities which are not paying taxes in Ukraine and in the country of origin clauses regarding the exchange of information are included at the end of the treaties, especially if are elaborated after the OECD model.
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This way, the Ukrainian tax authorities or even individuals may ask the foreign authorities to provide information regarding the legal entities which require exemptions from taxes or smaller withholding taxes.
The double tax treaties signed by Ukraine have a huge impact on the Ukrainian market, attracting foreign investors every year.
If you would like to know more about taxation and businesses in Ukraine, you can contact us. Our lawyers can also help you set up a company in Ukraine with no requirement for a minimum share capital for LLC.