Ukraine, Austria To Raise Tax Rates In Double Tax Pact

Ukraine and Austria intend to revise their double tax agreement to raise rates of tax on cross-border income and introduce measures to combat tax base erosion and profit shifting (BEPS).

Ukraine's Cabinet on October 9, 2020, agreed to submit a law to the legislature, the Rada, to ratify the pending Protocol signed between the two countries.

The Protocol would increase the rate of withholding tax at source to 15 percent, from 10 percent, and on interest to 5 percent, from 2 percent. The rate of withholding tax that may be withheld at source will be raised from zero to 5 percent for use of any copyright for scientific work, or patents, etc., and from 5 to 10 percent for the use of copyright for literary works or for works of art.

The agreement will also be amended to preclude the double tax treaty from being used by taxpayers to derive tax benefits in inappropriate circumstances, such as through treaty shopping, or to use the treaty to achieve double non-taxation. It will enhance the ability of the two jurisdictions to share information in tax matters.

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