Today, the Government decided to again submit 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 to the Parliament for ratification.
What’s it about?
On September 4, 2013, the Governments of Ukraine and Malta signed the above Convention and the Protocol to it. The key goal of the Convention is to avoid the double taxation of the income of individuals and companies received in both countries. 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.
What are the benefits?
- The Convention prevents tax evasion;
- The Convention removes tax discrimination;
- The Convention establishes mechanisms for cooperation between the tax authorities of Ukraine and Malta by regulating procedures for the settlement of disputes;
- The Convention ensures exchange of tax data;
- The Convention fosters business activities;
- The Convention regulates international taxation issues between the two countries.
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%.