Today, deputy Minister of Finance of Ukraine Sergiy Marchenko and Ministry of Economy of the Republic of Turkey Nihat Zeybekci have signed the protocol on amendments to the Agreement on the Avoidance of Double Taxation between the governments of Ukraine and Turkey.
The Protocol is aimed to avoid double taxation of the incomes of private persons and legal entities generated on the territory of both countries. To do this, taxation rights for different kinds of income will be distributed between Ukraine and Turkey depending on their place of origin. Also, taxes paid by the respective party in the respective country will be taken into account when calculating due taxes for the same payer in the other country.
What is the benefit?
• Favorable conditions are established for investors from Ukraine and Turkey;
• Business initiatives are stimulated;
• Income taxation is settled in the bilateral relations between Ukraine and Turkey.
• Tax evasion will be prevented while reducing pressure on diligent tax payers;
• Tax discrimination will be removed;
• Mechanisms will be established to improve cooperation between the tax authorities of Ukraine and Turkey by setting bilateral settlement procedures;
• Tax data exchange will be established.
What comes next?
Ukraine and Turkey have to finalize their domestic procedures required to ratify the Protocol.
The Protocol between Ukraine and Turkey stipulates the following:
• Extension of the term “resident” according to the OECD Model Tax Convention;
• Amendments to the article on information exchange significantly expanding taxa data exchange between Ukraine and Turkey without restrictions related to the national taxation-related interests or banking secrecy;
• New article on mutual assistance in levying taxes obliging the two countries to assist each other in claiming outstanding tax payments.