Kyiv
EY
19A Khreschatyk Street
Kyiv 01001 Ukraine
ey.com/globaltaxguides
+380 (44) 490-3000
Fax: +380 (44) 490-3030
Principal Tax Contact and Business Tax Services Leader
Vladimir Kotenko
+380 (44) 490-3006
Mobile: +380 (67) 507-7369
Email: vladimir.kotenko@ua.ey.com
Business Tax Advisory, International Tax and Transaction Services –International Corporate Tax Advisory and International Tax and Transaction Services – Transaction Tax Advisory
Vladimir Kotenko
Igor Chufarov
+380 (44) 490-3006
Mobile: +380 (67) 507-7369
Email: vladimir.kotenko@ua.ey.com
+380 (44) 492-8231
Mobile: +380 (67) 246-3751
Email: igor.chufarov@ua.ey.com
International Tax and Transaction Services – Transfer Pricing
Igor Chufarov
Global Compliance and Reporting
Vladimir Kotenko
People Advisory Services
Olga Gorbanovskaya
+380 (44) 492-8231
Mobile: +380 (67) 246-3751
Email: igor.chufarov@ua.ey.com
+380 (44) 490-3006
Mobile: +380 (67) 507-7369
Email: vladimir.kotenko@ua.ey.com
+380 (44) 490-3022
Mobile: +380 (67) 507-7362
Email: olga.gorbanovskaya@ua.ey.com
Indirect Tax – Customs and International Trade
Vladimir Kotenko
Legal Services
Borys Lobovyk
+380 (44) 490-3006
Mobile: +380 (67) 507-7369
Email: vladimir.kotenko@ua.ey.com
+380 (44) 490-3047
Mobile: +380 (67) 536-0521
Email: borys.lobovyk@ua.ey.com
The information in this chapter is current as of 1 March 2024. Special tax rules have been enacted for the period of martial law in Ukraine, which are briefly summarized in Section G. Martial law was introduced in Ukraine on 24 February 2022 by the Decree of the President of Ukraine “On Martial Law in Ukraine” No. 64/2022, duly approved by Verkhovna Rada of Ukraine and has been prolonged since that time.
A. At a glance
(a) Special tax rates exist for insurance companies, banks and lottery companies.
(b) The following interest is exempt from withholding tax:
• Interest and income (discounts) received by nonresidents from state securities, municipal bonds or debt securities if these instruments are secured by state or municipal guarantees (except for profit of nonresidents from lowtax jurisdictions under the approved list)
• Other income from state securities, paid by the Ministry of Finance of Ukraine
• Interest payments to nonresidents on loans received by the state or to a municipal budget if they are reflected in the state or municipal budget or in the budget of the National Bank of Ukraine (NBU)
• Interest on loans obtained by business entities if fulfillment of these loans is secured by state or municipal guarantees
(c) Withholding tax exemption is available for interest paid to nonresident lenders on loans financed through the issuance of debt securities (interest on loan participation notes) on a stock exchange outside Ukraine. The following conditions apply:
• If the loan is obtained before 2017, the exemption applies if the funds provided as a loan were raised with the aim to provide (directly or indirectly) a loan to a resident.
• If the loan is obtained in 2017 or 2018, the exemption applies if all of the following conditions are satisfied:
The qualifying debt securities are listed on a recognized stock exchange (currently, the list contains 21 stock exchanges in various jurisdictions, including the New York Stock Exchange, London Stock Exchange, Deutsche Boerse AG, Japan Exchange Group, Inc. and Singapore Exchange).
The funds provided as a loan were raised with the aim to provide (directly or indirectly) a loan to a resident.
The foreign interest recipient is not resident in a low-tax or non-transparent jurisdiction (see Transfer pricing in Section E for more details).
A reduced 5% withholding tax rate applies to interest from loans obtained from 2019 onward, subject to similar conditions.
(d) The tax base is calculated as the difference between the nominal value of the discount bonds and the acquisition value (purchase price) of the bonds on the primary or secondary stock market. Exemptions apply (see footnote [b] above).
(e) In essence, the tax on insurance payments is not a withholding tax, because the tax on insurance payments is not withheld from the payments remitted to the nonresident recipient, but is paid at the expense of the Ukrainian company making the payments (that is, the economic burden of paying the tax is borne by the Ukrainian party).
The 0% rate applies to the following:
• Insurance and reinsurance payments to nonresidents that meet the requirements established by the NBU
• Insurance payments with respect to civil aviation passenger transportation
• Insurance payments to nonresident individuals under mandatory insurance agreements
• Insurance payments under Green Card insurance agreements (mandatory third-party liability insurance for car owners of states participating in the Green Card system)
• Reinsurance payments with respect to placement of risks in foreign nuclear pools on behalf of members of the nuclear insurance pool
The 4% rate applies to insurance payments to nonresidents under insurance agreements covering risks outside Ukraine (subject to exceptions). The standard 12% rate applies in all other cases.
(f) Payment of in-kind Ukrainian-source income is subject to 15% withholding tax under a gross-up formula provided in the Tax Code.
(g) Profit from disposal of state securities, municipal bonds or debt securities received by nonresidents is exempt from withholding tax if these instruments are secured by state or municipal guarantees (except for profit of nonresidents from low-tax jurisdictions).
(h) Special rules apply to large taxpayers and to transfers of losses in the course of reorganizations. For further details, see Relief for losses in Section C.
B. Taxes on corporate income and gains
Corporate profit tax. Ukrainian legal entities (except for nonprofit organizations) are subject to corporate profit tax (CPT) on their worldwide income and gains. Foreign legal entities (except for organizations with diplomatic privileges or immunities) are subject to CPT if they receive Ukrainian-source income. CPT also applies to nonresidents who conduct business activity in Ukraine through a permanent establishment (PE) and/or receive Ukrainian-source income, and other nonresidents obliged to pay CPT in Ukraine.
Foreign companies that have a place of management in Ukraine are included in the list of CPT payers and are taxed on their Ukraine-source income.
PEs. The Ukrainian tax law envisages that a PE could arise for a nonresident in Ukraine by virtue of a fixed place of business, provision of services through personnel, construction site and related supervisory activity, and dependent agent’s activity. The 2020 tax reform law has introduced several anti-Base Erosion and Profit Shifting (BEPS) initiatives, including changes to the Ukrainian PE rules. These changes extended and specified the scope of PE, introduced new rules for tax registration and taxation of nonresidents carrying out activity in Ukraine through PEs, and granted to the Ukrainian tax authorities additional powers with respect to PE detection and related tax administration, including forceful tax registration of nonresidents, unscheduled tax audits, and tax seizure of nonresidents’ property located in Ukraine.
Rates of tax. The standard CPT rate is 18%.
Banks are subject to a 50% CPT rate in 2023 and to a 25% CPT rate in 2024 and future years.
Temporary CPT exemptions are available for the following cases, subject to qualifying conditions:
• For the aircraft industry: until 1 January 2025
• For large investment projects: within five consecutive years until 1 January 2035
• For profit of business entities engaged exclusively in the manufacturing of electrical vehicles, engines, batteries, and charges for electric vehicles as well as of some other qualifying means of transportation: until 31 December 2035
• For agricultural producers engaged in breeding, rearing and production of poultry, ostriches and quails, except for
rearing chickens, and chicken meat and eggs production: until 1 January 2027
A special tax regime is available for the information technology (IT) industry (see Diia City Regime in Section G).
Capital gains. Capital gains are included in the pretax financial result and generally taxed at the regular CPT rate.
Special tax rules apply to capital gains derived from trading in securities. Profits from trading in securities are included in taxable profit. Losses from trading in securities, including losses on security revaluations, can be carried forward indefinitely to offset future income from such trading.
Special rules apply to capital gains from qualifying foreign-toforeign direct and indirect transfers of real-estate-rich Ukrainian companies. Nonresident buyers must register with the Ukrainian tax authorities and administer withholding tax on such transfers. The applicable withholding tax rate is 15%, subject to treaty protection.
Administration. Under the general rule, taxpayers must report CPT quarterly on a cumulative basis. Annual CPT reporting is available for the following taxpayers:
• Newly incorporated companies
• Agricultural producers
• Companies with annual income, net of indirect taxes, of less than UAH40 million (approximately USD1,051,270)
Taxpayers that file only an annual return must submit it within 60 days after the year-end. If a taxpayer files tax returns quarterly, the quarterly tax returns must be submitted within 40 days after the end of the quarter, and the final annual return must be submitted within 60 days after the end of the year. Tax is payable within 10 days after the deadline for submitting the tax return.
Dividends. A company distributing dividends to its shareholders must pay an 18% advance corporate profit tax (ACPT) on the positive difference between the amount of dividends and taxable profit for the reporting year for which dividends are paid, provided that the tax liability for the year is settled (if unsettled, ACPT is levied on the whole amount of dividends). The tax is paid either before or at the moment of the dividend distribution. The ACPT is paid at the expense of the dividend payer and does not decrease the amount of dividends due to shareholders. In general, ACPT can be offset against the CPT liability of the taxpayer in the current period and subsequent periods.
Exemption from ACPT on dividends applies to the following dividends:
• Dividends paid to individuals
• Dividends paid by joint investment vehicles
• Dividends paid to shareholders of the taxpayer’s parent company, up to the amount of dividends received by the parent company from third companies
• Dividends paid to companies whose profits are exempt from tax, up to the amount of such exempt profits in the period for which dividends are paid
Ukrainian CPT payers do not include in their taxable profit dividends received from other Ukrainian CPT payers (except for collective investment vehicles and companies whose profits are exempt from tax, up to the amount of such exempt profits). Payments of dividends are not deductible for CPT purposes.
Dividends distributed to nonresidents are subject to withholding tax at a rate of 15% (to be calculated under a gross-up formula if distributed in-kind), unless an applicable double tax treaty provides otherwise.
The following payments are considered equivalent to dividends:
• Any monetary or in-kind payments made by legal entities to their shareholders in relation to the distribution of part of or all their net profit
• Payments for securities (corporate rights) to related and other qualifying nonresidents in transactions falling under transferpricing control in the amount exceeding the arm’s-length level
• Value of goods (services) purchased from related and other qualifying nonresidents in transactions falling under transferpricing control in the amount exceeding the arm’s-length level
• Understatement of the value of goods (services) supplied to related and other qualifying nonresidents in transactions falling under transfer-pricing control in the amount below the arm’slength level
• Monetary or in-kind payments to nonresident shareholders in relation to reductions of share capital, buy-backs of the corporate rights, withdrawals from shareholding or similar transactions between legal entities and their shareholders in the amount resulting in decrease of the retained earnings of the legal entity
The second through fifth payments above are considered equivalent to dividends starting 1 January 2021 and are excluded from the scope of ACPT.
The application of double tax treaty protection to payments considered to be equivalent to dividends should be analyzed on a case-by-case basis.
Foreign tax relief. Ukrainian companies may credit foreign tax paid with respect to foreign-source profits against Ukrainian tax imposed on the same income, up to the amount of such Ukrainian tax. The credit is granted only if the taxpayer submits a written confirmation from the tax authorities of the foreign country that certifies payment of the foreign tax.
C. Determination of taxable profit
General. Taxable profit is defined as the financial result before tax, determined under Ukrainian accounting standards or under International Financial Reporting Standards, subject to established adjustments. Add-back adjustments of the financial result for tax purposes include the following:
• Thirty percent of the cost of goods, including non-current assets (except for purchased right-of-use assets under lease agreements), works and services purchased from or supplied to nonresidents registered in low-tax and non-transparent jurisdictions, nonresidents incorporated in specific legal forms that do not pay CPT and/or are not tax residents in their country of
registration or purchased from nonprofit organizations if the amount of purchase from nonprofit organizations exceeds 25 minimum salaries (approximately USD4,665). This limitation does not apply to transactions falling under transfer-pricing control (see Transfer pricing in Section E) or if the taxpayer substantiates the arm’s-length level of the expenses/income under transfer-pricing rules.
• Royalties paid to nonresidents exceeding the sum of royalty income and 4% of the taxpayer’s net sales income for the preceding reporting year. The limitation does not apply to transactions falling under transfer-pricing control or if the taxpayer substantiates the arm’s-length level of the royalties under transfer-pricing rules. In some cases, royalties are added back in full.
• Adjustments under the thin capitalization rules (see Debt-toequity ratios and other restrictions on the deductibility of interest in Section E).
• Transfer-pricing adjustments.
• Provisions and allowances accrued in financial accounting (except for salary and payroll tax provisions).
• Funds or cost of goods, works or services provided to nonprofit organizations in an amount exceeding 4% (8% for sports nonprofit organizations) of the taxpayer’s taxable profit for the preceding year.
• Non-repayable financial aid, or the cost of goods, works or services provided for free, to entities (other than registered nonprofit organizations and individuals) that are not CPT payers or are CPT exempt, or to parties related to CPT payers (if the recipients of such aid declared tax losses for the previous reporting year, provided that the donor recognized such aid as expenses when determining its pre-tax financial result).
• Penalties under civil law contracts, compensation for damages and lost profit paid to non-CPT payers (except for individuals) or to CPT payers that enjoy CPT exemption, and fines and penalties imposed by tax and other authorities.
• Impairment of fixed assets and intangible assets.
• Losses from participation in the equity of other companies.
• Value of transactions falling under transfer-pricing control that are not recognized by the tax authorities due to a lack of business purpose (see Transfer pricing in Section E).
Industry-specific adjustments apply for banks and financial institutions.
Tax-loss carryforwards decrease the pretax financial result for CPT purposes, subject to special rules for large taxpayers. Transferability of tax losses through a reorganization is limited.
If a taxpayer’s income does not exceed UAH40 million (USD1,051,270), the taxpayer may opt not to make any adjustments to the financial result before tax for CPT purposes.
Depreciation. For purposes of tax depreciation, fixed assets are defined as assets that are designated for use in a taxpayer’s business activity for more than one year and that have a value exceeding UAH20,000 (approximately USD526). The Tax Code provides for 16 groups of tangible fixed assets and six groups of non-tangible fixed assets. Similar to financial accounting, tax depreciation is accrued per each item.
• In general, transactions between Ukrainian residents and cash settlements within Ukraine may not be carried out in foreign currency.
• All statutory accounting and tax reporting must be in Ukrainian currency.
• Wages and salaries paid to Ukrainian citizens must be in Ukrainian currency.
• Legal basis or obligation to perform a transaction in foreign currency that is confirmed by appropriate documents is required for the purchase of foreign currency.
• The deadline for settlements on export and import transactions is 365 days, subject to exceptions.
• There are e-limits, which are annual cap amounts for the remittance of foreign currency outside Ukraine, including the placement of own funds in foreign bank accounts and foreign investment. The limits are EUR2 million for legal entities and EUR200,000 for individuals. There are exhaustive lists of transactions not falling under the limits.
• Declared (publicly announced) simplification of currency control over low-value transactions (up to UAH400,000) does not work because banks are required to verify that there is no artificial splitting of the transactions.
• Exporters’ transactions using the letter of credit form of payment are subject to simplified currency control.
• Rules for transactions related to capital movement are complicated.
Special currency-control restrictions apply during the period of martial law in Ukraine (see Section G for more details).
Debt-to-equity ratios and other restrictions on the deductibility of interest. If a taxpayer’s debt to nonresidents exceeds its equity by at least 3.5 times, interest accrued to nonresident parties by such taxpayer may be deductible in an amount of up to 30% of the sum of its CPT base, financial expenses and tax depreciation for the reporting year, and is nondeductible in full if this indicator is negative. Tax losses carried forward from prior periods are not taken into account for the calculation of the CPT base in this case.
The remaining interest, annually reduced by 5%, may be carried forward indefinitely, subject to the same limitation.
Special rules apply to capitalized interest. The limitation does not apply to interest accrued in favor of international financial organizations (subject to certain conditions), to foreign banks or to financial companies engaged exclusively in leasing activities.
If interest in transactions subject to transfer-pricing control (see Transfer pricing) exceeds the arm’s-length level, the above rules apply to the amount of interest that does not exceed this level.
Transfer pricing. Transfer pricing (TP) rules have been effective in Ukraine since 2013. Ukrainian TP regulations are frequently changed.
Under the current TP rules, controlled transactions include the following:
• Transactions with nonresident related parties.
A taxable object for the ECT is an exhaustive list of transactions that involve monetary or in-kind payments in favor of persons who are not residents of Diia City. Such transactions include, among others, the following:
• Distribution of dividends
• Payment of royalties in excess of 4% of net operating income for the previous year
• Payment on withdrawal of the owner of corporate rights from the participants, liquidation and repurchase of own corporate rights, in excess of the amount of investment
• Payment of interest, commissions, other rewards
• Free-of-charge provision of property, works, services or their sale without receipt of payment within 365 days and provision of financial aid that is not subject to repayment within 12 calendar months
• Purchase of property, works, services on a prepayment basis if the delivery period exceeds 365 days from the date of payment
• Investments in objects located outside of Ukraine
• Contributions to the authorized capital, joint ventures or trust management
• Transfer of funds to own accounts in foreign banks
• Business transactions that are recognized as controlled according to Article 39 of the Tax Code if their conditions do not comply with the arm’s-length principle
• Other qualifying transactions and payments, including those in favor of nonresidents
If payments for the transactions subject to ECT are made in-kind, the tax base is determined at a value not lower than the arm’slength level.
The basic tax reporting period for ECT filing is a calendar year.
Attractive personal income taxation rules apply under the Diia City Regime.
To join the Diia City Regime, a legal entity should be incorporated under the laws of Ukraine and meet the established eligibility criteria.
The Diia City Regime is supposed to be in place for 25 years.
F. Treaty withholding tax rates
Ukraine honors the double tax treaties of the former USSR, except for treaties that have been superseded by new treaties concluded directly by Ukraine or renounced by the other party to the treaty. Ukraine is not a member of the Organisation for Economic Co-operation and Development (OECD). As a result, the Ukrainian tax authorities are not formally bound by the commentary of the OECD model convention; however, Ukrainian tax authorities and Ukrainian courts often rely on OECD commentary. The OECD-Ukraine Country Program was launched in June 2023 as part of the initial dialogue on Ukraine’s accession to the organization.
The rates in the table below reflect the treaty rates for dividends, interest and royalties paid from Ukraine to residents of treaty jurisdictions. Exceptions or conditions may apply, depending on the terms of the particular treaty.
Beneficial ownership and tax residency tests, as well as additional eligibility conditions, must be met to apply reduced withholding tax rates under the double tax treaties. The national law details the “beneficial owner” condition and provides for the “principal purpose test” and “look through” concept.
Ukraine has ratified the Multilateral Instrument (MLI) and deposited its final positions with the OECD. On 1 December 2019, the MLI entered into force for Ukraine. The impact of the MLI on the text of Ukrainian treaties (including the date of its entry into effect for a particular treaty) should be analyzed on a caseby-case basis. Dividends
Algeria 5/15 (d) 0/10 (e) 10
Armenia 5/15 (d) 0/10 (e) 0
Austria 5/15 (d) 0/5 (p) 5/10 (o)
Azerbaijan 10 0/10 (e) 10
Belgium 5/15 (d) 0/2/10 (h)(aa) 0/10 (k)(aa)
Brazil 10/15 (d)(ee) 0/15 (ff) 15
Bulgaria 5/15 (d) 0/10 (e) 10
Canada 5/15 (d)(pp) 0/10 (e)(nn) 0/10 (f)
China Mainland (bb) 5/10 (d) 0/10 (e) 10
Croatia 5/10 (d) 0/10 (e) 10
Cyprus 5/10 (xx) 0/5 (e) 5/10 (yy)
Czech Republic 5/15 (d) 0/5 (e) 10
Denmark 0/5/15 (d)(g) 0/10 (e)(oo) 5
Egypt 12 0/12 (e) 12
Estonia 5/15 (d) 0/10 (e) 10
Finland 0/5/15 (m) 0/5/10 (n) 0/5/10 (l)
France 0/5/15 (a) 0/2/10 (j) 0/10 (r)
Georgia 5/10 (d) 0/10 (e) 10
Germany 5/10 (d) 0/2/5 (h) 0/5 (k)
Greece 5/10 (d) 0/10 (e) 10
Hungary 5/15 (d) 0/10 (e) 5
Iceland 5/15 (d) 0/10 (jj) 10
India 10/15 (d) 0/10 (e) 10
Indonesia 10/15 (d)(qq) 0/10 (e) 10
Iran 10 0/10 (e) 10
Ireland 5/15 (d) 0/5/10 (aaa) 5/10 (yy)
Israel 5/10/15 (d)(z) 0/5/10 (dd) 10
Italy 5/15 (d) 0/10 (e) 7
Japan 15 0/10 (e) 0/10 (ww)
Jordan 10/15 (d)(ii) 0/10 (hh)(ii) 10 (ii)
Kazakhstan 5/15 (d)(pp) 0/10 (e) 10
Korea (South) 5/15 (d) 0/5 (e) 5
Kuwait 0/5 (cc) 0 10
Kyrgyzstan 5/15 (d) 0/10 (e) 10
Latvia 5/15 (d) 0/10 (e) 10
Lebanon 5/15 (d) 0/10 (e) 10
Libya 5/15 (d) 10 10
Lithuania 5/15 (d) 0/10 (e) 10
Luxembourg 5/15 (d) 0/5/10 (ccc) 5/10 (ddd)
Malaysia 5/15 (d) 0/10 (e) 8
Malta 5/15 (d) 0/10 (e) 10
Mexico 5/15 (d) 0/10 (zz) 10
Moldova 5/15 (d) 0/10 (e) 10
Mongolia 10 0/10 (rr) 10
Morocco 10 (ee) 0/10 (e) 10
Netherlands 0/5/15 (i) 0/5 (e)(rr) 5/10 (gg)
North Macedonia 5/15 (d) 0/10 (e) 10
Norway 5/15 (d) 0/10 (e)(kk) 5/10 (x)
Pakistan 10/15 (tt) 0/10 (uu) 10
Poland 5/15 (d) 0/10 (e) 10
Portugal 10/15 (q) 0/10 (e)(ll) 10
Qatar 0/5/10 (eee) 0/5/10 (fff) 5/10 (yy)
Romania 10/15 (d) 0/10 (e) 10/15 (s)
Saudi Arabia 5/15 (d) 10 10
Singapore 0/5/15 (ss) 0/10 (e) 7.5
Slovak Republic 10 10 10
Slovenia 5/15 (d) 5 5/10 (gg)
South Africa 5/15 (d) 0/10 (e)(ll) 10
Spain 15 0 0/5 (b)
Sweden 0/5/10 (d)(t) 0/10 (u) 0/10 (v)
Switzerland 0/5/15 (y) 0/5 (p) 5
Syria 10 0/10 (e) 15
Tajikistan 10 0/10 (e) 10
Thailand 10/15 (d) 0/10/15 (w) 15
Türkiye 10/15 (d) 0/10 (p) 10
Turkmenistan 10 0/10 (e) 10
United Arab
Emirates 0/5/15 (y) 0/5 (e) 0/10 (k)
United Kingdom 0/5/15 (c) 0/5 (e) 5
United States 5/15 (d) 0 10
Uzbekistan 10
(vv) 5/10 (d)
(e)
(bbb)
(a) The 0% rate applies to dividends paid to one or more companies that are the beneficial owners of these dividends and if either of the following conditions is satisfied:
• The recipient company or companies hold directly or indirectly at least 50% of the capital of the company paying the dividends, and the total amount of their investments in the paying company is not less than 5 million French francs (the tax authorities have clarified that EUR762,245 equivalent shall apply).
• The investments of the recipient companies in the company paying the dividends are guaranteed or insured by the other state, the central bank of such state or a person acting on behalf of such state.
The 5% rate applies to dividends paid to companies that own at least 20% of the capital of a Ukrainian resident payer or 10% of the capital of a French resident payer. The 15% rate applies to other dividends.
(b) The 0% rate applies to royalties paid for the use of, or the right to use, copyrights for literary, dramatic, musical or artistic works (excluding royalties with respect to cinematographic films or any means of image or sound reproduction for use in radio or television). The higher rate applies to other royalties.
(c) The 0% rate applies if the beneficial owner of the dividends is a pension scheme. The 5% rate applies to dividends if the beneficial owner is a company that holds directly or indirectly at least 20% of the capital of the payer.
(d) The lower rate applies to dividends paid to companies that are the beneficial owners of such dividends and own a minimum percentage of the capital of the payer (under the treaties, this percentage ranges from 10% to 50%). The higher rate applies to other dividends. Additional conditions may apply.
(e) The 0% rate may apply to interest paid to or, in some cases, by government institutions or central banks of the contracting states. In some cases, the 0% rate also applies to the following:
(aa) A discrepancy exists between the Ukrainian and English texts of the Belgium treaty with respect to the withholding tax rates for interest and royalties. In the Ukrainian version, the highest treaty rate is 5%, while in the English version, it is 10%. The English version prevails in accordance with Paragraph (e) of the protocol to the treaty.
(bb) The treaty does not apply to the Hong Kong Special Administrative Region (SAR).
(cc) The 0% rate applies to dividends paid to the government, a political subdivision or local authority, the central bank or other state financial institution. The 5% rate applies to all other dividends.
(dd) The 0% rate applies to interest paid on loans granted by the government of a contracting state, including its political subdivisions and local authorities, the central bank or financial instrumentalities of that government. The 5% rate applies to interest paid on loans granted by banks. The 10% rate applies to all other interest payments.
(ee) If a resident of a contracting state has a PE in the other state, such PE may be subject to a withholding tax under the law of that other state. However, this tax may not exceed 10% of the amount of the profits of that PE after payment of the corporate tax on the profits.
(ff) Interest arising in a contracting state and paid to the government of the other contracting state, political subdivisions thereof or agencies (including financial institutions) wholly owned by that government or a political subdivision is exempt from tax in the state where the income arises, unless the rule mentioned in the following sentence applies. Interest on securities, bonds or debentures issued by the government of a contracting state, political subdivisions thereof or agencies (including financial institutions) wholly owned by that government or political subdivision thereof is taxable only in that state.
(gg) The 5% rate applies to royalties paid for the use of, or right to use, scientific works, patents, trademarks, designs or models, plans, secret formulas or processes, or, in some cases, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. The 10% rate applies to royalties paid for the use of, or the right to use, copyrights of literary or artistic works, including cinematographic films, and tapes for television or radio broadcasting.
(hh) Interest derived by the government of the contracting state including local authorities thereof, a political subdivision, the central bank or any financial institution controlled by such government, the capital of which is wholly owned by the government of the contracting state, is exempt from tax.
(ii) The treaty rates do not apply to residents of a contracting state who perform their activity outside of this state if the income and profits of such persons are exempt from tax or are taxed at a substantially lower rate in such state.
(jj) The 0% rate applies if interest is received and actually held by the government or a political subdivision. Interest paid to and held by a resident of one contracting state is exempt from tax in the other contracting state if it is paid with respect to a loan made, guaranteed or insured or with respect to any other debt claim or credit, if the loan, debt claim or credit is guaranteed or insured on behalf of the first-mentioned state or by an authorized organ.
(kk) The 0% rate also applies if the interest is paid by a purchaser to a seller with respect to commercial credit resulting from deferred payments for goods, merchandise, equipment or services, unless the sale or indebtedness is between associated persons.
(ll) The 0% rate also applies to interest paid to an institution (including a financial institution) with respect to a loan made under an agreement between the governments of the contracting states.
(mm) The reduced rates apply if the beneficial owner of the dividends is subject to tax with respect to such dividends.
(nn) The 0% rate also applies to interest arising in a contracting state and paid to a resident of the other contracting state that was established and operated exclusively to administer or provide benefits under one or more pension, retirement or other employee benefits plans if the following conditions are satisfied:
• The recipient is the beneficial owner of the interest and is generally exempt from tax in the other state.
• The interest is not derived from the carrying on of a trade or a business or from a related person.
(oo) The 0% rate also applies to interest paid with respect to indebtedness incurred in connection with the sale on credit of industrial, commercial or scientific equipment by an enterprise that is resident of one contracting
state to an enterprise resident in the other contracting state, unless the sale or indebtedness is between associated enterprises.
(pp) Tax imposed on the earnings of a company attributable to a PE in a contracting state in addition to the tax that would be chargeable on the earnings of a company that is a national of that state may not exceed 5% of the amount of such earnings.
(qq) If a resident of a contracting state has a PE in the other state, such PE may be subject to a withholding tax under the law of that other state. However, this tax may not exceed 10% of the amount of the profits of that PE after payment of the corporate tax on the profits. This measure does not affect provisions contained in production-sharing contracts and contracts of work (or any other similar contracts) relating to the oil and gas sector or other mining sector entered into by the government of Indonesia, its instrumentalities, its relevant state oil and gas company or any other entities of the government of Indonesia, with a person that is a resident of the other contracting state.
(rr) The 0% rate applies to the interest paid with respect to bonds, debentures or similar obligations of the government, political subdivisions, local authorities or the central bank.
(ss) The 0% rate applies to dividends if the beneficial owner of the dividends is the government, the central bank, or other government institutions or statutory bodies. The 5% rate applies to dividends if the beneficial owner is a company (other than a partnership) that holds directly at least 20% of the capital of the payer. The 15% rate applies to other dividends.
(tt) The 10% rate applies to dividends paid to the beneficial owner of the dividends if the beneficial owner owns directly at least 25% of the capital stock of the company paying the dividends. The 15% rate applies to other dividends.
(uu) The 0% rate applies to interest received and belonging to the government, political subdivisions, local authorities or the central bank.
(vv) The double tax treaty with Yugoslavia applies to Serbia and Montenegro.
(ww) The 0% rate applies to royalties paid for the use of, or the right to use, copyrights of literary, artistic or scientific works, including cinematographic films and films or tapes for radio or television broadcasting. The 10% rate applies to the royalties for the use of, or the right to use, patents, trademarks, designs or models, plans, secret formulas or processes, or industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.
(xx) The 5% rate applies to dividends paid to the beneficial owner of the dividends if such owner holds at least 20% of the capital of the company paying the dividends and has invested in the acquisition of the shares or other rights of the company the equivalent of at least EUR100,000. The 10% rate applies in all other cases.
(yy) The 5% rate applies to royalties with respect to copyrights of scientific works, patents, trademarks, secret formulas, processes or information concerning industrial, commercial or scientific experience. The 10% rate applies in other cases.
(zz) The 0% rate applies to the following types of interest:
• Interest paid to or by the state, political subdivision or central bank
• Interest arising and paid with respect to a loan granted for a term over three years that is guaranteed or insured or to a credit granted for a term over three years that is guaranteed or insured by the authorized state institutions
The 10% rate applies in other cases. The procedure for application of these restrictions will be set by the competent authorities of Mexico and Ukraine.
(aaa) The 0% rate applies to interest if any of the following circumstances exist:
• The beneficial owner of the interest is the government or an agency authorized by the government.
• The interest is paid with respect to loans made, guaranteed or issued by or on behalf of the government or an agency authorized by the government.
• The interest is paid with respect to debt claims that are warranted, insured, or directly or indirectly financed by the government or an agency authorized by the government.
The 5% rate applies to interest paid in connection with the sale on credit of industrial, commercial or scientific equipment, or in connection with loans granted by banks. The 10% rate applies in all other cases if the recipient of the interest is resident in either treaty state and is the beneficial owner of the interest.
(bbb) See footnotes (b) and (c) in Section A.
(ccc) The 0% rate applies to interest paid with respect to a loan made, guaranteed or insured, or with respect to any other debt claim or credit guaranteed or
restrictions are still in place. These restrictions include the following:
• Cross-border transactions are substantially limited.
• Payments in foreign currency by residents for the purchase of services are suspended except for certain specifically permitted transactions as per the approved list.
• The statutory deadline for cross-border settlements is reduced to 180 days for transactions made starting 5 April 2022 (exceptions apply).
• Settlements in Russian rubles and Belarusian rubles, as well as settlements of Russian and Belarusian residents, are prohibited.
• Restrictions on cash withdrawals by individuals are introduced (tougher restrictions for withdrawals abroad and lighter restrictions for withdrawals on the territory of Ukraine).
• The set-off of claims in export and import transactions is generally prohibited (exceptions apply).
• The purchase of foreign currency is prohibited if there is still foreign currency available in bank accounts.
Currency-control rules for the period of martial law may be further amended or supplemented. Monitoring legislative developments is strongly recommended.