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Ukrainian Tax Regime for Holding Companies Is Improved

Ukraine

On 19 May 2010, the corporate profits tax regime of Ukraine was amended to include both a participation exemption and a new exemption to the advance profits tax. Under the new participation exemption regime, Ukrainian companies are entitled to relief from corporate profits tax for dividend income received from a resident or overseas affiliate qualifying as a controlled entity. Taxand Ukraine reviews the improvements to their tax regime and identifies opportunities for investors to consider.

Exemption applies to dividends received after 19 May 2010. Similarly, a new exemption from the advance profits tax paid by businesses upon distribution of dividends is now available. If the distribution of profits is proportionate to the dividends received, the exemption from tax will be available.

 

Taxand's Take

The new tax regime will bring opportunities for investors to consider, including:

  • setting up intermediary companies in Ukraine that would be tax neutral giving extra flexibility in structuring Ukrainian operations
  • tax free regime for foreign source dividends
  • opportunities for investors to place assets not afforded exemption treatment in jurisdictions with softer tax regime

Your Taxand contact for further queries is:
Vladimir Volodymyrska St.
T: +380 44 492 8282
E: kyiv@magisters.com

Taxand's Take Author