Recent Ukrainian Tax Developments

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1. Prolongation of Deadline for Obligatory Registration of Non-Residents with Ukrainian Tax Authorities

On 1 January 2021, the Law of Ukraine № 1117 “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine to Ensure the Collection of Data and Information Required for Declaration of Certain Objects of Taxation” dated 17 December 2020 (the “Amendments”) entered into force.

Pursuant to the Amendments, a non-resident must register with the Ukrainian tax authorities at the location of its permanent establishment prior to commencing of its business through this establishment.

Non-residents whose permanent establishments are registered as corporate taxpayers in Ukraine were originally obliged to submit documents to the tax authorities for their registration as corporate taxpayers before 31 March 2021, however, the Ministry of Finance of Ukraine has prolonged the deadline to 19 May 2021.

2. Amendments to Tax Treaty Between Ukraine and the United Arab Emirates

In February 2021, the Protocol amending the tax treaty between Ukraine and the UAE was signed by the participating states.

In addition to the increasing applicable tax rates from 3% to 5% for interest and royalty, the Protocol adds to the treaty a new article (“Right to Benefits“) which limits the application of benefits of the treaty if the main purpose of any transaction is the obtaining of such benefits.

The Protocol has not been ratified by the Parliament of Ukraine and therefore did not enter into force.

3. Tax Incentives for Large Investments

On 28 March 2021, the Law of Ukraine “On Amendments to the Tax Code of Ukraine on the Specifics of Taxation of Businesses Implementing Investment Projects with Large Investments in Ukraine” No. 1293 (the “Tax Incentives Law”) entered into force.

The Tax Incentives Law provides exemption from import VAT and customs duties, corporate income tax, as well as introduces lower land tax rates or exemption from land tax until 1 January 2035 for the businesses implementing qualifying projects with large investments.

To obtain these tax benefits, qualifying investors must enter into an investment agreement with Ukraine.

For more information on the above, please contact Dmytro Ivanusa, Partner, divanusa@mazurivanusa.com

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