The Double Taxation Relief (Taxes on Income) (Ukraine) Order 1993

Made: 20th July 1993

At the Court at Buckingham Palace, the 20th day of July 1993 Present, The Queen’s Most Excellent Majesty in Council

Now, therefore, Her Majesty, in exercise of the powers conferred upon Her by section 788 of the said Act, and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:—

1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (Ukraine) Order 1993.

2

It is hereby declared—

• (a) that the arrangements specified in the Convention set out in Part I of the Schedule to this Order and in the Exchange of Notes constituting an Agreement set out in Part II of that Schedule have been made with the Government of Ukraine with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of Ukraine;

• (b) that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of Ukraine concerning taxes covered by the arrangements including, in particular, provisions about the prevention of fiscal evasion with respect to those taxes; and

• (c) that it is expedient that those arrangements should have effect.

SCHEDULE

PART I — CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF UKRAINE FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Ukraine;

Desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains;

Have agreed as follows:

Article 1 — Personal scope

This Convention shall apply to persons who are residents of one or both of the Contracting States.

Article 2 — Taxes covered

Article 3 — General definitions

Article 4 — Residence

Article 5 — Permanent establishment

Article 6 — Income from immovable property

Article 7 — Business profits

Article 8 — Shipping and air transport

Article 9 — Associated enterprises

Article 10 — Dividends

Article 11 — Interest

Article 12 — Royalties

Article 13 — Capital gains

Article 14 — Independent personal services

Article 15 — Dependent personal services

Article 16 — Directors' fees

Directors' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17 — Artistes and sportsmen

Article 18 — Pensions

Article 19 — Government service

Article 20 — Students

Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that first-mentioned State, provided that such payments arise from sources outside that State.

Article 21 — Other income

Article 22 — Elimination of double taxation

Article 23 — Limitation of relief

Article 24 — Partnerships

Where, under any provision of this Convention, a partnership or joint venture is entitled, as a resident of Ukraine, to exemption from tax in the United Kingdom on any income or capital gains, that provision shall not be construed as restricting the right of the United Kingdom to tax any member of the partnership or joint venture who is a resident of the United Kingdom on his share of such income or capital gains, but any such income or gains shall be treated for the purposes of Article 22 of this Convention as income or gains from sources in Ukraine.

Article 25 — Non-discrimination

Article 26 — Mutual agreement procedure

Article 27 — Exchange of Information

Article 28 — Members of diplomatic or permanent missions and consular posts

Nothing in this Convention shall affect any fiscal privileges accorded to members of diplomatic or permanent missions or consular posts under the general rules of international law or under the provisions of special agreements.

Article 29 — Entry into force

Article 30 — Termination

This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Convention, through the diplomatic channel, by giving notice of termination at least six months before the end of any calendar year beginning after the expiry of five years from the date of entry into force of the Convention. In such event, the Convention shall cease to have effect:

• (a) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1st April in the calendar year next following that in which the notice is given;

• (b) in Ukraine:

• (i) in respect of taxes on dividends, interest or royalties for any payments made on or after the sixtieth day following that day on which the notice is given;

• (ii) in respect of tax on profits (income) of enterprises for any taxation period beginning on or after 1st January in the calendar year next following that in which the notice is given;

• (iii) in respect of income tax on citizens of Ukraine, foreign citizens and stateless persons for any payments made on or after the sixtieth day following that day on which the notice is given.

In witness whereof the undersigned, duly authorised thereto, have signed this Convention.

Done in duplicate at London this 10th day of February 1993 in the English and Ukrainian languages, both texts being equally authoritative.

For the Government of the United Kingdom of Great Britain and Northern Ireland:

For the Government of Ukraine:

Norman Lamont

Hryhory P'yatachenko

PART II — EXCHANGE OF NOTES

London

10th February 1993

Excellency

I have the honour to refer to the Convention between the Government of the United Kindom of Great Britain and Northern Ireland and the Government of Ukraine for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital Gains which has been signed today and to make on behalf of the Government of the United Kingdom the following proposals for the purpose of applying Article 22: Elimination of double taxation:

1

Interest payable by a permanent establishment of a resident of a Contracting State

2

Wages, salaries and other remuneration for personal services payable by a permanent establishment of a resident of a Contracting State

3

Interest payable by a company or other taxable entity which is a resident of a Contracting State

4

Wages, salaries and other remuneration for personal services payable by a company or other taxable entity which is a resident of a Contracting State

5

Withholding Tax

Signed

N. H. Nicholls — Clerk of The Privy Council

Explanatory note

(This note is not part of the Order)

The Convention with Ukraine is set out in the Schedule to this Order.

The Convention provides for business profits not arising from a permanent establishment to be taxed only in the country of the taxpayer’s residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated (Articles 5 and 7).

Income from immovable property and capital gains derived from such property may be taxed in the country in which the property is situated (Article 6 and 13).

Shipping and air transport profits are generally to be taxed only in the residence state of the operator (Aricle 8).

The Convention includes rules for determining the taxable profits when a company in one country is related to a company in the other (Article 9).

The rate of tax imposed in the country of source on dividends derived by a resident of the other is not to exceed 5 per cent of the gross amount of the dividends when the beneficial owner is a company controlling, in the case of the United Kingdom, at least 20 per cent of the voting power in the company paying the dividends and in the case of Ukraine at least 20 per cent of the authorised capital in the company paying the dividends, and 10 per cent in all other cases (Article 10).

Subject to certain anti-avoidance provisions the country of source will exempt from tax interest and royalties paid to a resident of the other country (Articles 11 and 12).

Capital gains arising from the disposal of moveable property are normally to be taxed only in the country of the taxpayer’s residence. Gains arising from the disposal of assets of a permanent establishment or fixed base which the taxpayer has in the other country may be taxed in that other country (Article 13).

The earnings of temporary business visitors and some other individuals are, subject to certain conditions, to be taxed only in the country of the taxpayers residence (Articles 14 and 15). Fees received by a resident of one country in his capacity as a director of a company resident in the other country may be taxed in the latter country (Article 18). Income derived from the activities of artistes and sportsmen may be taxed in the country in which those activities are performed (Article 19). Occupational pensions (other than those paid in respect of government service) and annuities are to be taxed only on the recipient’s country of residence (Article 18) while government service remuneration and pensions are normally to be taxed only by the paying Government (Article 19). Payments made to visiting students, apprentices and business trainees are generally exempt from tax in the country visited (Article 20). Other income (with the exception of income from trusts and estates of deceased persons under administration) not specified in the Convention remains taxable only in the recipient’s country of residence unless the income is attributable to a permanent establishment or fixed base that the taxpayer has in the country of source (Article 21).

Where income continues to be taxable in both countries credit will be given in the taxpayer’s country of residence for tax imposed by the other country. In the case of dividends, the United Kingdom will give credit for underlying tax paid in Ukraine where the shareholder is a United Kingdom company which controls at least 10 per cent of the voting power in the company paying the dividends (Article 22).

There are provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 25), and for consultation (Article 26) and exchanges of information (Article 27) between the taxation authorities of the two countries.

The Convention will enter into force on the date of the later of the notifications by each country of the completion of its legislative procedures. The Convention is to take effect in the United Kingdom on or after 1st April in respect of corporation tax and on or after 6th April for income tax and capital gains tax in the calendar year next following that in which it enters into force. The date of entry into force will in due course be published in the London, Edinburgh and Belfast Gazettes.

Footnotes

[^f00001]: 1988 c. 1; section 788 is extended by section 277 of the Taxation of Chargeable Gains Act 1992 (c. 12).