Ukraine: tax burden on dividends decreased

Ukraine

On 23 March 2017, the Ukrainian Parliament adopted the Law On Amendments to the Tax Code of Ukraine regarding clarification of certain provisions and elimination of contradictions due to the adoption of the Law On Amendments to the Tax Code of Ukraine regarding improving the investment climate in Ukraine (the “Law”).

The Law decreases the personal income tax rate on dividends from 18% to 9%. The decreased rate applies to dividends accrued by non-residents, joint investment institutions and entities that are not corporate profits taxpayers.

The new personal income tax rate for qualified dividends shall apply retrospectively starting from 1 January 2017.  

The Law is currently awaiting signature by the President of Ukraine. Once officially published, it will become effective.

The reduction in the tax burden on dividends, particularly from non-residents, together with a recent positive loosening of Ukrainian foreign currency restrictions, should mark a significant step forward towards more transparent investments being made by Ukrainian individuals abroad.

Legislation: the Law of Ukraine On Amendments to the Tax Code of Ukraine regarding clarification of certain provisions and elimination contradictions due to the adoption of the Law “On Amendments to the Tax Code of Ukraine regarding improving the investment climate in Ukraine dated 23 March 2017