Ukraine and United Kingdom of Great Britain and Northern Ireland Signed Protocol on Amendments to Agreement on Avoidance of Double Taxation
On October 9, Ukraine and the United Kingdom of Great Britain and Northern Ireland amended the Agreement on avoidance of double taxation, provided for by the relevant Protocol. This was reported by the press service of the Ministry of Finance. The amendments to the agreement are aimed at exemption of the physical and legal entities from paying double taxes on incomes received in the territories of both parties. This can be achieved both by distributing the right to tax certain types of income depending on the place of their receipt between the two countries, and by taking into account the taxes paid in the territory of the other country in the tax obligations of a taxpayer of one country.
It is expected that the signing of the Protocol will contribute to the creation of the favorable conditions for the investors in Ukraine and the United Kingdom, as well as to increase the business initiative of the entrepreneurs.
The settlement of income taxation in bilateral relations between Ukraine and Great Britain will allow to eliminate tax discrimination, to ensure the exchange of tax information and improve the cooperation between the tax authorities of the states through the development of an effective mechanism for mutual coordination of disputable issues.
The Protocol on amendments to the Agreement on avoidance of double taxation provides for:
· application of a tax rate of 5% to the dividends, the actual owner of which is the company (other than the partnership), owning at least 20% of the capital of the company that pays dividends, and increase in the rate from 10% to 15% in other cases;
· increase in interest rates and royalties - from 0% to 5%;
· increase in royalty tax rate - from 0% to 5%;
· significant enhancement of the contractual parties regarding the exchange of tax information.