Ukraine and Australia are preparing new taxation rules

On 20 August, Draft Law No. 0382 was registered with the Verkhovna Rada of Ukraine. The draft law concerns the ratification of the Convention between Ukraine and Australia for the elimination of double taxation of income and the prevention of tax evasion and avoidance. The official register of Verkhovna Rada draft laws confirms that the document was registered specifically on 20 August.

For most Ukrainian companies, Australia may seem like a distant market.

However, for business owners, investors, and companies that already make—or plan to make—payments between Ukraine and Australia, this is an important tax development.

An international tax convention determines which state, and under what conditions, has the right to tax a particular type of income.

This concerns, in particular, cross-border business activities, investment income, and other payments between residents of the two states.

One point is especially important to understand.

A double taxation avoidance convention does not provide an automatic exemption from taxes.

To benefit from its provisions, it is necessary to correctly determine tax residency, the transaction structure, the status of the income recipient, and to meet all conditions stipulated by applicable law.

Therefore, once ratification is completed, Ukrainian businesses working with Australia should review their existing agreements and payment structures.

This is particularly important where substantial amounts are involved.

In international tax planning, it is important not only to comply with the law.

It is also important not to pay more tax than a business is legally required to pay under domestic law and the applicable international treaty.

Verkhovna Rada of Ukraine — Draft Law No. 0382

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Author: Ihor Yasko, Managing Partner of WINNER Law Firm, Candidate of Legal Sciences (PhD in Law).