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The State Committee of Ukraine for regulatory policy and entrepreneurship has approved the idea by the Ministry of Social Policy on adoption of additional taxes on Ukraine’s transactions with companies located in offshore zones. Apart from the 12%-contribution to the Pension Fund, the latest edition of the draft law provides paying additional 5% of income as dividends, interest and royalty to non-residents. However, experts really doubt one may count on any real financial effects to the budget as a result of it.
In November 2011 deputy prime-minister Sergei Tigipko proposed additional taxes for business entities engaged in relations with non-residential companies in offshore zones and in favor of non-residents. In May 2012 the very first draft version of the law was presented which contained an additional closure on collection of 5% of income as dividends, interest and royalty in favor of non-residential companies in the offshore zone. Additional funds to be received by the budget (approximately 3 billion UAH) will be then spent to cover the Pension Fund’s deficit.
According to Tax Code, dividends are today taxed by the 15% repatriation tax. If a double taxation treaty is in place, then tax rates are defined by mutual obligations of participating counties. For example, a 0% rate is today applied in respect to Cyprus.
The State Committee of Ukraine for regulatory policy and entrepreneurship also agreed with a broader list of offshore zones for the new tax administration regime: there are now 71 countries instead of previous 36. Among those are Panama, the Dominical Republic, United Arabian Emirates and Malta.
Original source: Kommersant-Ukraine
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