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Verkhovna Rada of Ukraine adopted law "On introduction of amendments into Tax Code of Ukraine" (as to taxation of incomes received by nonresidents from debt obligations)".

Verkhovna Rada of Ukraine adopted law “On introduction of amendments into Tax Code of Ukraine” (as to taxation of incomes received by nonresidents from debt obligations)”.

Posted in News.

Parliament of Ukraine adopted the law №2931 “On introduction of amendments into Tax Code of Ukraine concerning taxation of incomes received by nonresidents from debt commitments”.
As noted in a memorandum from 1 January, 2015 withholding from interest on government securities taxed on general terms – at the rate of 15% of their amount and at their expense payable to the budget when such payment.
However, in the case of international agreements of Ukraine for the avoidance of double taxation with the countries of residence of persons to whom the payments are made to such income.
In order to ensure the implementation of laws on the state budget and decisions on local budgets of cities of Ukraine for the year in terms of their funding from external and internal sources and involving entities – residents of Ukraine under the state (local) guarantee loans to implementation of investment and other development projects it is necessary to create appropriate legislative framework as regards exemption from income tax investors from transactions with state and local securities and income arising guaranteed by the state or the relevant local council borrowing.
The amendments to the Tax Code were perceived negatively by investors (creditors) Ukraine which significantly affect their decision to buy Ukrainian securities investment in Ukraine’s economy and lead only to increased cost of borrowing.
The purpose of amending the Tax Code is the need for income tax exemption of foreign investors from transactions with state and local securities and income arising guaranteed by the state or the relevant local council borrowing.
It is assumed that the law will provide funding for public (local) budgets through external borrowing and attract public entities loans (loans) under the state (local) warranty.
Paragraph 141.4 of Article 141 of the Tax Code is supplemented by point 141.4.10 which is not subject to tax income received by non-residents, or from interest income (discount) for government securities or municipal bonds or debt securities which performance of obligations secured by state local or warranties sold or are residents outside Ukraine through authorized non-resident agents, or interest paid to non-residents by the state or received in the budget of the Autonomous Republic of Crimea or local budget loans (loans or external borrowing) that appear in the state budget or local budgets or estimates of the National Bank of Ukraine, or loans obtained economic entities and the implementation of which is provided by state or local guarantees.
In sub-paragraph 165.1.2 paragraph 165.1 Article 165 envisages that the total monthly (annual) taxable income of the taxpayer does not include, among other things, the amount of income received by the taxpayer as interest in respect of the securities issued by the central executive body that implements state financial policy and debt obligations to the NBU, as well as the amount of income received by non-residents from interest accrued on government securities or municipal bonds or debt securities which performance of obligations secured by state or local guarantees, if such securities purchased by non-residents outside Ukraine through authorized agents – non-residents, or interest earned by non-residents for services rendered to the state budget or ARC or city budget loans (loans or external borrowing) that appear in the state budget or local budgets or NBU estimates, or provided to economic entities loans (loans), the implementation of which is provided by local or state guarantees.
This law was signed by the President of Ukraine May 25, 2015 and came into force on 27 May, 2015.

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