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Ukraine Mulling Tax Breaks For Intellectual Property Income

by Ulrika Lomas, Tax-News.com, Brussels

17 March 2020


The Government of Ukraine has announced plans to introduce a special tax regime for certain intellectual property income.

According to the draft proposal, which has been released for public consultation, the Government is considering offering a deduction to reduce the effective tax rate on income derived from intellectual property developed in Ukraine. Eligible companies would be able to reduce their taxable income, for corporate tax and social security tax purposes, from such IP assets by up to 80 percent, depending on their expenditure on related research and development.

As such, a business will be able to reduce the effective corporate tax rate on IP income to as low as 3.6 percent - i.e., 20 percent of the headline 18-percent corporate tax rate.

The regime would have restrictions in line with the Modified Nexus Approach, to ensure that only income from those activities with economic substance in Ukraine can benefit from the preferential income tax regime.

TAGS: tax | investment | tax incentives | intellectual property | manufacturing | transfer pricing | social security | Ukraine | BEPS

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