On April 13, the Parliament of Ukraine ratified the Convention between the Governments of Ukraine and Malta on the Avoidance of Double Taxation and Prevention of Income Tax Evasion as well as the Protocol to it. The Convention had been presented to the Parliament by Yuri Butsa, the deputy Minister of Finance responsible for European integration.
What’s the benefit?
The Convention shall remove the double taxation of the income of individuals and companies received in both countries. It shall also prevent tax evasion, support information exchange between the tax authorities of Ukraine and Malta as well as removes tax barriers for investments and trade.
This shall be achieved by distributing taxation powers between Ukraine and Malta depending on the origin of the income. Also, taxes paid in one country shall be respected when calculating the tax obligations of a taxpayer in another country. The Convention also guarantees equal tax regulations for companies from Ukraine and Malta operating in Malta and Ukraine respectively.
The Convention and the protocol to it were signed by the Government of Ukraine and the Government of Malta in September 2013.
The Convention sets the following tax rates for dividends, interest rates and royalties (according to the OECD Model Convention):
- dividends – the general tax rate is 15%; 5% are applied for dividends received by a company directly owning at least 20% of the capital of the company paying the dividends;
- tax rate for interest and royalty – 10%.