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Ukraine's Government has announced changes negotiated with Cyprus to their existing double tax agreement.
The revised text will close a loophole that has meant that income from immovable property situated in Ukraine has escaped taxation in Ukraine. Newly, income received by Cypriot residents from the sale of shares or other corporate rights will be subject to tax in Ukraine if more than 50 percent of the value of that income is directly or indirectly linked with immovable property income situated in Ukraine.
The minimum rate on dividends has been raised from two percent to five percent. This lower rate applies where the recipient holds 20 percent or more of the shares in the company distributing the dividend and invested at least EUR100,000 (USD113,500) to obtain that holding. A tax rate of ten percent applies otherwise.
The revised dividends section will become effective no earlier than January 1, 2019. Other changes have been proposed to bring the agreement into line with the latest international tax standards developed by the OECD.
The amendment has been forwarded to Ukrainian lawmakers for their approval.
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