Ukraine terminates agreement with Iran on avoidance of double taxation

The Cabinet of Ministers has approved a bill to terminate the agreement with Iran on the avoidance of double taxation.

This was reported by the press service of the Ministry of Finance.

The agreement has been in force since 1996.

"The purpose of the draft law is to implement the domestic procedures necessary to terminate the Agreement, taking into account the need for an urgent and effective response to the existing threats to Ukraine's national interests and security in connection with Iran's arms supplies to the Russian Federation.

Such actions of Iran make Iran responsible for the consequences of Russia's armed aggression against Ukraine and destroy bilateral relations," the Ministry of Finance explained.

The consequences of the termination of the agreement are:

• Preventing the replenishment of the budget of the country that helps the aggressor by providing Ukraine with preferential taxation conditions for Iranian residents operating in Ukraine. After the termination of the Agreement, all income of Iranian residents derived from sources in Ukraine will be subject to the general tax rate of 15% set by the Tax Code of Ukraine, instead of the preferential rate set by the Agreement: 10% for dividends; 10% for interest; 10% for royalties;

• preventing losses to the Ukrainian budget due to the crediting of tax paid in Iran by Ukrainian residents operating in Iran;

• release of Ukraine from its obligations to exchange information with Iran on tax issues;

• accelerating the curtailment of economic and financial ties with Iran.

Author - Serhii Kolomiets, 05/08/2023