Is it legitimate to apply the benefits under the Treaties for Elimination of Double Taxation to the payments from Ukraine made by entities exempt from income tax?
The struggle against erosion of tax base is growing not only in the world, but also in Ukraine. One of the directions of this struggle is the revision of the grounds for application of the benefits under the Treaties for Elimination of Double Taxation. Today, however, such efforts are focused mainly on the analysis of the status of the recipients of payments from the territory of Ukraine, in particular, on the question, whether the recipients of payments are considered to be tax residents for the purpose of conventions and/or beneficiary owners of such payments. However, as a condition for application of the benefits under the conventions the tax residency of the recipient is equally important as that of the payer.
This review analyses whether we can apply the exemption or reduction of the tax rates on dividends, interest, and royalties in case of payments to non-residents from the territory of Ukraine executed by entities, which are exempt from corporate income tax, such as single tax enterprises (including agriculture manufacturers – single tax payers of the fourth group), or collective investment institutions.
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