On October 9, 2017, Ukraine and the UK signed a Protocol amending the 1993 Tax Treaty (the "Ukraine-UK Protocol"). While the text of the Ukraine-UK Protocol is not yet publicly available, the Ukrainian Ministry of Finance has already reported on the agreement to increase Withholding Tax (the "WHT") on dividends, interest and royalty payments. While the currently effective 1993 Tax Treaty exempts both interest payments and royalty payments from WHT when the Ukraine-UK Protocol enters into force, the reduced rate of WHT will be established at 5%. The reduced 5% WHT rate applicable to dividends distributed to shareholders, who directly hold at least 20% of the capital of a distributing company, will remain intact. Otherwise, an applicable rate is set to increase from 10% to 15%


  1993 Tax Treaty Ukraine-UK Protocol
Dividends 5%/10% 5%/15%
Interest 0% 5%
Royalties 0% 5%

The Ukraine-UK Protocol elaborates on the mechanisms for exchange of information between the fiscal authorities. Finally, the Ukraine-UK Protocol is scheduled to enter into force after Ukraine and the UK notify each other about the completion of the domestic implementation procedures.

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The developments discussed above appear to be part of a broader Ukrainian policy to overhaul the existing tax treaty network, specifically those offering full exemptions from WHT. Therefore, the Ukrainian Government's 2015 Action Program declared an intention to amend the existing tax treaties with, inter alia, Cyprus, Switzerland, Luxembourg and The Netherlands. In providing an overview of recent developments, the Ukrainian Ministry of Finance has:

  • Signed a Protocol amending the Ukraine-Austria Tax Treaty with the ratification procedures still in progress.
  • Signed a Protocol amending the Ukraine-Cyprus Tax Treaty with the ratification procedures still in progress .
  • Commenced negotiation of amendments to the Ukraine-Switzerland Tax Treaty, with the last round of negotiations being held as recently as October 12, 2017.
  • Established a negotiation team with the aim of reviewing the Ukraine-Netherlands Tax Treaty.

Last but not least, Ukraine has committed to sign the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the "MLI") by the end of 2017. If and when signed, this would facilitate the implementation of at least two of the BEPS Actions, namely Action 6 on Treaty Abuse and Action 14 on Dispute Resolution Mechanisms, affecting more than 60 bilateral Ukrainian tax treaties.