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Ukraine Initiates Bill on Denunciation of Double Tax Treaty with Russia

On 2 May 2022, the Cabinet of Ministers of Ukraine initiated draft law ‘On the Denunciation of the Settlement with the Russian Authorities on the Avoidance of Double Taxation of Earnings and Property and the Prevention of Tax Evasion’, as a response to Russian military aggression against Ukraine.

When passed, the Bill on Denunciation will suspend preferential tax treatment for Russian residents (both natural persons and legal entities) receiving income in Ukraine. Specifically, after adoption of the Bill on Denunciation, the following changes will go into effect:

  • all Ukrainian-sourced income of residents of the Russian Federation will be subject to general tax rates according to the Tax Code of Ukraine, instead of currently effective preferential tax regimes established by the Double Tax Treaty;
  • Ukrainian residents operating in Russia will no longer be able to offset taxes paid in Russia against liabilities due in Ukraine;
  • Ukraine is no longer obliged to exchange information with Russia on tax issues.

The Bill on Denunciation has been sent to the Parliament of Ukraine for further consideration.

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