LETTER OF THE MAIN STATE TAX AUTHORITIES OF UKRAINE

of July 23, 1997 No. 12-0117/10-5833

About application of agreements about avoidance of double taxation

By Item 18.3 of article 18 of the Law of Ukraine "About introduction of amendments to the Law of Ukraine "About the taxation of profit of the companies" it is determined that it is necessary to understand the nonresidents created in the countries with which Ukraine has no the international treaties on avoidance of double taxation ratified by the Verkhovna Rada of Ukraine as the nonresidents created in offshore zones. As of 01.07.97 (for information of the Ministry of Foreign Affairs of Ukraine) the international agreements of Ukraine about avoidance of double taxation with 16 countries, namely with Belarus, Big Britain, Armenia, Denmark, Estonia, Kazakhstan, Canada, Latvia, Moldova, the Netherlands, Norway, Poland, Slovakia, Hungary, Germany, Sweden took effect.

At the same time Ukraine according to article 7 of the Law of Ukraine "About successorship of Ukraine", it is provided by which that "Ukraine is legal successor of the rights and obligations on international to agreements of USSR which do not contradict the Constitution of Ukraine and interests of the republic", applies agreements of the being USSR on avoidance of double taxation that are effective to the introduction in operation of new agreements. Agreements of the USSR are effective in the relations of Ukraine with 15 countries: Austria, Belgium, Bulgaria, India, Spain, Italy, Cyprus, Malaysia, Mongolia, USA, Finland, France, Czech Republic, Switzerland, Japan. Thus, for the purposes of Item 18.3 of article 18 of the Law of Ukraine "About introduction of amendments to the Law of Ukraine "About the taxation of profit of the companies" it is necessary to apply agreements of the former USSR.

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