Ukraine and Cyprus have signed the revamped intergovernmental agreement
to avoid double taxation.
An Interfax-Ukraine correspondent has reported that
the document was signed by Finance Minister of Ukraine Natalie Jaresko and
Minister of Energy, Commerce, Industry and Tourism of Cyprus Yiorgos
Lakkotrypis in the presence of the presidents of the two countries.
The sides signed a protocol amending the convention
between the Ukrainian and Cypriot governments on avoiding double taxation and
preventing income tax payment evasions.
The intergovernmental agreement on cooperation in
higher education, the memorandum of understanding between the State Agency for
Energy Efficiency and Energy Saving of Ukraine and the Ministry of Energy,
Commerce, Industry and Tourism of Cyprus in the area of sustainable energy and
energy efficiency were also signed in the presence of the two presidents.
The agreement of cooperation in the archives of the
two countries has been signed.
As reported, on July 21, 2015, the Finance Ministry of
Ukraine agreed with Cyprus to increase taxation rates for some types of passive
income. The decision was reached after the second round of talks between Deputy
Finance Minister Olena Makeyeva and representatives of the Cypriot government
on July 2, 2015.
The ministry agreed with the Cypriot government on the
signing of the new convention to avoid double taxation, which is in line with
recommendations of the Organisation for Economic Co-operation and Development
(OECD).
According to the agreements, only income received by
Cyprus residents after shares, and other corporate rights are sold, over 50% of
the cost of which directly or indirectly are linked to immovable property
located in Ukraine, is exempted from taxation.
The Finance Ministry said that at present, the only
demand for income to be exempt after the sale of the property of Cyprus
residents is dependent on the location of the property in Ukraine.
In addition, taxpayers are to hold 20% in a company
and invest at least EUR 100,000 in its charter capital to receive the right to
apply the 5% tax rate when paying dividends, while today it is enough to meet
only one of these conditions.
The sides also agreed to increase the interest rate
tax, from 2% to 5%.
If the new convention is signed and the Ukrainian and
Cypriot parliaments ratify it, the new conditions for the taxation of passive
income will take effect no earlier than January 1, 2019.
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