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Cyprus signed a Protocol with the Government of Ukraine that will amend the Double Tax Treaty between the two countries as of 1st January 2019, under which Cyprus ensures a most favourable nation clause.

Cyprus Ministry of Finance announced today that on the 11th of December 2015 in Kiev, the protocol amending the Convention for the Avoidance of Double Taxation and the prevention of fiscal evasion with respect to taxes on income was signed between the Republic of Cyprus and Government of Ukraine. The signing of the protocol took place in the presence of the President of the Republic of Cyprus, Mr Nicos Anastasiades and the President of Ukraine, Mr. Petro Oleksiyovych Poroshenko.

According to the announcement, the signed protocol will come into effect as of 1st January 2019, on the date when the existing Convention will expire. The existing Convention has been signed on the 8th of November 2012 and entered into force on the 1st of January 2014.

The signed protocol is based on the OECD Model Tax Convention for the Avoidance of Double Taxation on Income and on Capital. During the negotiations a most favourable nation clause has been agreed, for the taxes on interest, dividends, royalties and capital gains. This clause is considered of high importance as Cyprus will be treated equitably with other jurisdictions.

As noted, the text has been agreed between the two negotiating teams of the Contracting States and will contribute to the further development of the trade and economic links between Cyprus and the Government of Ukraine, as well as with other countries.

The announcement concludes by stating that: “Upgrading and expanding the network of Double Tax Conventions, is of high economic and political importance and aims to further strengthen and attract foreign investment in Cyprus as its standing an international business center is elevated”.

* A detailed analysis of the Protocol will be released in a forthcoming newsletter.