delegation of the Ministry of Finance and State Fiscal Service of Ukraine
participated in the Ukrainian-Austrian negotiations on the review of the
bilateral Convention on the Avoidance of Double Taxation and Prevention of
Evasion of Income and Property Taxes. The Convention was signed by Ukraine and
Vienna in 1997 and is now not compatible with valid international standards.
The parties agreed to sign a Protocol paving the way to the increase of tax
rates for dividends, interest rates and royalty.
Ministry of Finance is actively working to close loops in the regulations which
make tax evasion possible. This work includes the adjustment of the current
international agreements on the avoidance of double taxation to the
the negotiations initiated by the Ukrainian side, the parties agreed to adjust
the above Agreement to the OECD Model Tax Convention on Income and Capital.
According to the signed Protocol, the tax rates for dividends, interest rates
and royalty shall be increased. Also, the Protocol contains special
supplementary regulations on the expanded bilateral exchange of tax data and
assistance in tax collection according to the OECD standards.
Key facts on the Protocol to the
Convention on the Avoidance of Double Taxation:
- the tax rate for dividends is increased from 10% to 15%;
- the tax rate for interest rate is increased from 2% to 5%;
royalty rate for patents, trademarks, industrial design, plans, models, product
formulas or processes is increased from 0% to 5%;
- the royalty rate for the copyright of literary works,
artworks including cinema is increased from 5% to 10%.
Key facts on the OECD model
Model Tax Convention on Income and Capital is a standard agreement on the
avoidance of double taxation for the residents of one or both signing
countries. All member-states of the OECD are recommended this Model Convention;
Ukraine is not a OECD member, the Cabinet of Ministers of Ukraine in February
2013 adopted the action plan set to deepen cooperation between Ukraine and the
OECD in the period from 2013 till 2016. The Memorandum of Understanding between
the Government of Ukraine and the OECD on deeper cooperation was signed on July
- due to the review of all international agreements on the avoidance of double
taxation, a single approach was elaborated for their examination as well as for
the elaboration of draft agreements to adjust them to the OECD Model Convention.