Ukrainian govt asked parlament to toughen Ukraine-Cyprus convention on avoiding double taxation
The Ukrainian government has proposed that the Verkhova Rada toughens provisions of the convention signed by Ukraine and Cyprus on avoiding double taxation and preventing tax evasion, Ukraine's Finance Ministry has reported.
Income received by residents of Cyprus in Ukraine from selling stocks and other corporate rights will be taxed if over 50% of their value directly or indirectly relates to immovable property located in Ukraine. In addition, taxpayers who seek to apply 5% tax on dividends are to hold at least 20% of shares in a company and invest no less than EUR 100,000 in its charter capital. At least one of the conditions can currently be met. The 10% tax rate will apply in other cases. The tax rate for dividends will be increased from 2% to 5%.
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The new conditions for taxation will take effect no earlier than January 1, 2019.
"The ministry is taking active steps to bring the economy out of the shadows and combat against outflow of capital to offshore zones. The Finance Ministry entered into an arrangement with the Cypriot government to make amendments the convention on avoiding double taxation recommended by the Organisation for Economic Co-operation and Development (OECD)," the ministry said.