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Cyprus ready to sign new double taxation prevention agreement with Ukraine
05 July 2011
President of Cyprus Demetris Christofias has said that his country is ready to sign a new double taxation prevention agreement with Ukraine.

"We are ready to sign a double taxation prevention agreement," he said at a joint press conference with Ukrainian President Viktor Yanukovych in Kyiv on Monday.

Yanukovych, in turn, said that during his talks with Christofias, the sides had discussed the need to expand the bilateral contractual framework.

He said that the current level of trade between the two countries at nearly $300 million did not match their current potential.

"We have agreed to extend our contractual framework. For example, one of the key issues on which we agreed and decided to resolve in the near future, no later than September-October, is the prevention of double taxation. This issue will be resolved," Yanukovych said.

He noted that Cyprus had invested about $11 billion in Ukraine and that over 3,000 Cypriot enterprises were currently operating in Ukraine. Ukraine, in turn, has invested about $6.5 billion in the Cypriot economy, he added.

Christofias, in turn, invited Yanukovych to make an official visit to Cyprus.

As reported, Ukrainian Ambassador to Cyprus Oleksandr Demyaniuk predicted in February 2011 that a new agreement between Ukraine and Cyprus on the prevention of double taxation could be signed as early as this year. He said that three rounds of talks on this issue were held in 2010 and that the Ukrainian and Cypriot sides were close to signing such an agreement.

However, according to Demyaniuk, the negotiation process has run into problems. In particular, the Cypriot side does not agree to a 10% profit tax, as it is lower than in the previous agreement. However, the diplomat is optimistic about a positive outcome for the negotiations. "I think the Cypriot side will go for a compromise," he said.

The ambassador said he was against the idea of unilateral renunciation of the current agreement on the prevention of double taxation, as, in his view, it will affect relations between the countries. The best option, in his opinion, is to synchronize the process of giving up the previous agreement with the signing of a new one.

As reported, Ukraine and Cyprus work under an agreement signed during the Soviet times, which is now being criticized for creating tax loopholes. A bill on renouncing this agreement has been tabled in parliament several times, but it has not been backed by a majority.

Vice Prime Minister Sergiy Tigipko issues instructions to prepare documents to renounce the agreement. In addition, he said Ukraine would do it unilaterally if there were a delay by Cyprus in the tax negotiations, although later Prime Minister Mykola Azarov denied there was a possibility of Ukraine's unilaterally renouncing the agreement.

Source: KyivPost

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