Civil Society Government considers new tax laws creating yet another “tax paradise” for tycoons

08/06/2010 News and Publications

Civil Society Government initiated by the All-Ukrainian NGO “Civil Right’s Movement of Oleg Riabokon” considers that the newest tax legislation will create “tax paradise” for tycoons. It related to laws providing tax exemptions for dividends received from abroad. According to the respective Law No. 2156 which was signed by the President of Ukraine and validated on May 19, 2010, dividends received by Ukrainian holding from their affiliated foreign companies will be exempted from taxation.

On the one hand, this tax law initiative may eliminate double taxation issue for companies operating on foreign markets. But on the other hand, companies with many offshore subsidiaries and intermediaries via the financial schemes may well not pay the profit tax in Ukraine at all. And their owners may legally be announced the richest in the country.

Civil Society Government believes that such legislative lapse should be rectified; so that the country may receive additional budgetary receipts as well stimulate the real foreign investments of Ukrainian companies. Only introduction of taxation of indirect dividends received from the offshore jurisdictions and cancellation of obligatory licensing of foreign investments will enable such stimulation of Ukrainian economy.