Today, on February 19, 2024, the Minister of Finance of Ukraine, Serhiy Marchenko, signed the Convention between the Government of Ukraine and the Government of Japan for the elimination of double taxation concerning income taxes and the prevention of tax evasion and avoidance, along with its Protocol. The document was signed in Tokyo during the Japan-Ukraine conference on economic growth and reconstruction, where the Minister of Finance of Ukraine is part of the delegation of the Prime Minister of Ukraine, Denys Shmyhal.
"The signing of this agreement opens up new opportunities for our countries, contributes to creating favorable conditions for investment, and strengthens the economic relations between Ukraine and Japan," said Finance Minister Serhiy Marchenko.
In particular, the Convention with the Protocol for the avoidance of double taxation establishes rules for the allocation between Ukraine and Japan of the rights to tax certain types of income received by residents of one Contracting State from sources in the other Contracting State. It includes limiting the right of the country of source of income to tax dividends (5% for dividends received by a company of a Contracting State owning at least 25% of the capital of a company of the other Contracting State paying such dividends), interest (10% and 5% if the beneficial owner of the interest is a bank, insurance company, or securities dealer, or a recognized pension fund, or if the interest is paid with respect to indebtedness arising from the sale of equipment or goods or the provision of credit) and royalties (5%).
Additionally, the Convention defines the methods for the elimination of double taxation by the Contracting States, establishes agreements on the exchange of tax information between the tax authorities of Ukraine and Japan, and the conduct of mutual agreement procedures, which are carried out by competent authorities in case a resident of one of the Contracting States believes that as a result of actions by one or both Contracting States, it is or will be subject to taxation not in accordance with the provisions of this Convention.
The Ministry of Finance of Ukraine and the State Tax Service of Ukraine are the entities responsible for implementing the Convention and the Protocol.
