Corporate profits tax

New double taxation treaties with Lebanon, Kuwait and the United Arab Emirates
December 2003

The Verkhovna Rada of Ukraine ratified the following double taxation treaties.

The Convention for the avoidance of double taxation with the Republic of Lebanon dated 22 April 2002

Under the Convention Ukrainian withholding tax (15%) on dividends, interest and royalties can be reduced to:

• Dividends – 5% where the beneficial owner of dividends is a company (other than partnership) which directly owns at least 20% of the capital of the company paying the dividends or 15% in all other cases;
• Interest – 10%. The interest should be exempt from tax when paid to the State, central bank, State’s institutions or is payable under a loan agreement guaranteed, insured or financed by a state financial institution;
• Royalty – 10%.

The Agreement establishes the following withholding tax rates on dividends, interest and royalties:

• Dividends – 5% or 0% where interest is paid to the Government, the National Bank or other governmental authorities of the other state;
• Interest – 0%;
• Royalties – 10%

The Convention establishes the following withholding tax rates on dividends, interest and royalties:

• Dividends - 5% where the beneficial owner of dividends is a company (other than partnership), which owns at least 10% in the capital of the payer of dividend or 0% where interest is paid to the Government, other governmental authorities, the National Bank of the other state or in case with the United Arab Emirates to Abu Dhabi Investment Authority;
• Interest - 3%. Where interest is payable to the State, its political-administrative unit, its central bank or in case with United Arab Emirates to Abu Dhabi Investment Authority and Abu Dhabi Fund for Economic Development the withholding tax does not apply;
• Royalty - 10%.

(Laws of Ukraine No. 1011, 1012 and 1013-IV dated 19 June 2003)

Tax & Legal Affairs#55/12, December 2003



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