October 9, 2017, Minister of Finance Ukraine Oleksandr Danyliuk and State Secretary of Great Britain for Europe and America Alan Duncan signed the Protocol on amendments to the Agreement on the Avoidance of Double Taxation between Ukraine and the United Kingdom during their bilateral meeting in London.
The Protocol is aimed to avoid double taxation of the incomes of private persons and legal entities generated on the territory of both countries. To do this, taxation rights for different kinds of income will be distributed between Ukraine and Great Britain depending on their place of origin. Also, taxes paid by the respective party in the respective country will be taken into account when calculating due taxes for the same payer in the other country.
What is the benefit?
Favorable conditions are established for investors from Ukraine and Great Britain;
Business initiatives are stimulated;
Income taxation is settled in the bilateral relations between Ukraine and Great Britain.
Tax evasion will be prevented while reducing pressure on diligent tax payers;
Tax discrimination will be removed;
Mechanisms will be established to improve cooperation between the tax authorities of Ukraine and Great Britain by setting bilateral settlement procedures;
Tax data exchange will be established.
The Protocol between Ukraine and the UK stipulates the following:
• Taxation of dividends at the 5% rate – if the actual owner of the dividends is a company (other than a partnership) directly owning at least 20% of the capital of the company which pays the dividends; for all other cases, the tax rate has been increased from 10% to 15%;
• The tax rate for interest rates has been increased from 0% to 5%;
• The tax rate for royalties has been increased from 0% to 5%;
• The tax data exchange clause has been amended significantly expanding the exchange capacities of the Parties.
Ukraine and the United Kingdom must conduct the internal state procedures which are necessary for the ratification of the Protocol.