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We have been heard: Ukraine denounces the Double Tax Treaty with Russia

03 May, 2022 Newsletters

Recently, in our newsletter “Do we need a double tax treaty with Russia (the country-aggressor)? It is still effective!” we have raised an important issue of the need to denounce the Treaty between the Government of Ukraine and the Government of Russia on the avoidance of double taxation of income and property and the prevention of tax evasion dated February 08, 1995 (the Treaty). Today, we are pleased to inform that the Government of Ukraine has begun to take steps regarding the denunciation of the Treaty.

On April 29, 2022, the Government agreed a draft law on the denunciation of the Double Tax Treaty.

According to the Government, after the adoption of the relevant law, the consequences of the denunciation of the Treaty will be the following:

1) Ukraine will not provide preferential tax conditions for the Russian residents doing business in Ukraine which could contribute to enrichment of the country-aggressor budget. After the denunciation of the Treaty, all income of the Russian residents received from sources in Ukraine will be subject to the general tax rate of 15 % established by the Tax Code of Ukraine, instead of preferential rates established by the Treaty: 5 % – on dividends; 10 % or 0 % – on the interest; 10 % – on royalties;

2) prevention of losses to the budget of Ukraine due to the taxes paid in Russia by residents of Ukraine doing business in the country-aggressor;

3) exemption of Ukraine from obligations undertaken regarding the exchange of information on tax issues with Russia.

Currently, we are monitoring the latest updates and will be informing you about the next steps regarding the denunciation of the Treaty with Russia.

The above commentary presents the general statement for information purposes only and as such may not be practically used in specific cases without professional advice.

Kind regards,

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