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Cyprus Signs New Tax Treaty With Ukraine


Cyprus and the Ukraine have had a treaty in place now for thirty years, since 1982. According to Ukraine statistics, Cyprus in a major contributor in the growth of foreign direct investment to the country. Due to this and the length of time since the original treaty the Ukraine Government authorized the conclusion of a new treaty in February 2007. After much deliberation on both sides in late 2011 it was approved and finally signed into law on 8 November 2012 during a visit of the Ukraine President to Cyprus.

The purpose of these double tax treaties are to supersede local tax legislation. This is to avoid taxes are being paid in both countries. Promoting of business between the two countries was the driving force.

Aspects of the new Treaty include;
  • 15% withholding tax on dividends paid from the Ukraine to Cyprus lowered to 5% providing the recipient meets certain conditions
  • 2% withholding tax for interest paid from the Ukraine to Cyprus
  •  5% - 10% withholding tax on royalties payable from the Ukraine to Cyprus
  • Credit method adopted for eliminating double taxation on income
The new treaty will only come into effect on the 1st of January of the following year after both countries have ratified the agreement so it is anticipated that this will in fact not come into force until 1 January 2014.

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