The Ministry of Finance of Ukraine has agreed with the Republic of Cyprus about the increase in rates of taxation of certain types of passive funds coming, according to a dispatch office.

According to the Ministry, the proper decision was reached on 2 July, following the second round of negotiations of the Deputy Minister of Finance Olena makeieva, the commissioners of the government of Cyprus. Following the talks, the parties signed the corresponding Protocol.

under this policy, Kiev and Cyprus agreed on signing the new OECD Convention on avoidance of double taxation. For example, from taxation in Ukraine will be exempt only those income received by a Cyprus resident from the alienation of shares or other corporate rights, not less than 50 percent of their value directly or indirectly to immovable property located in Ukraine.

It is also stated that a prerequisite for use of a 5% tax on dividends paid, except 20% of the ownership shares of the organization, is investing More than 100 thousand euros in the authorized capital of Ukrainian organizations. The tax rate upon payment % determined by the parties of the negotiation process at the level of 5% (now 2%).

in case of signing of the text of the new Convention and its ratification parlamente of Ukraine and the Republic of Cyprus, fresh rules for the taxation of passive funds coming will not take effect before January 1, 2019.

The previous Convention was signed on 8 November 2012 in Nicosia. This contract gives opportunities without taxation to Cyprus a significant sum of money, and the majority of Ukrainian enterprises apply this mechanism to minimize payments to the state Treasury.

Although Ukraine is not a member of the OECD, in February 2013 the Cabinet of Ministers of Ukraine approved the action plan in relation to the deepening of cooperation between Ukraine and the Organization for economic cooperation and development (OECD) for 2013-2016, the respective Memorandum of understanding between the government of Ukraine and the OECD in relation to the deepening of cooperation was signed on 2 July 2014. According to the agreement, the Ukrainian government aims to bring in congruence to the OECD model Convention all existing contracts in order to prevent the outflow of capital from Ukraine abroad.

sections: Politics