On 8 November 2012, during the visit of Ukraine’s President Viktor Yanukovych to Cyprus, Cyprus and the Ukraine signed a new double tax treaty to replace the current Cyprus-USSR treaty which has been applicable between the two jurisdictions for 30 years.
The new withholding tax rates which will be applicable are as follows:
15% withholding tax on dividends paid from the Ukraine to Cyprus lowered to 5% provided that (i) the Cyprus recipient owns at least 20% of share capital of the Ukrainian entity distributing dividends or (ii) the Cyprus company has made a minimum investment of EUR 100,000 in the Ukrainian entity's share capital.
2% withholding tax for interest paid from the Ukraine to Cyprus.
5% withholding tax rate on royalties payable from the Ukraine to Cyprus in relation to an author's right on scientific work, patent, trademark, etc and 10% in all other cases.
The new Treaty will become effective from the 1st January of the year following the one in which it will be ratified by both countries. It is likely to be ratified during 2013 and if this is the case will enter into force on 1 January 2014.
Referring to the new Treaty, Yanukovych said he was confident that “we are opening a new stage of relations, which will be more dynamic, more effective, and we are ready for the comprehensive deepening of relations with Cyprus".