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Taxes

23/ 10/ 2013

Due to the efforts of the Association, an explanation concerning the application date of the Convention between the Government of Ukraine and the Government of the Republic of Cyprus “On the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income”, dated 29 October 1982, was provided by the Letter of the Ministry for Foreign Affairs of Ukraine No 72/14-612/1-3330, dated 10 October 2013.

Background: The Republic of Cyprus and Ukraine performed interstate procedures, which were necessary to validate the Convention between the Government of Ukraine and the Government of the Republic of Cyprus “On the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income” (hereinafter – the Convention) and the Protocol signed on 8 November 2012 in Nicosia. The states informed their relevant foreign affairs ministries regarding the completion of the interstate procedures by notes dated 2 May and 7 August 2013 respectively.

But the Ukrainian text of Article 26 of the Convention differed from the English one. The English edition of the Convention is decisive in respect to interpreting differences between the Ukrainian and Greek texts. In this case the Association applied with official letters to the appropriate bodies seeking an explanation in regard to the date when the application of the Treaty between the Government of the USSR and Government of the Republic of Cyprus “On Avoidance of Double Taxation with respect to Taxes on Income and Estate”, signed on 29 October 1982, (hereinafter – the Treaty dated 29 October 1982) was terminated. It appeared that the Treaty dated 29 October 1982, lost its legal force on 7 August of this year, but that the Convention should start to be applied from 1 January 2014.

We are glad to announce that the Ministry for Foreign Affairs of Ukraine in their Letter No 72/14-612/1-3330 dated 10 October 2013 “On Correction of the Text of International Agreement” has resolved this problem and has stated that the Ukrainian and Cypriot parties have found a consensus regarding the correcting of technical mistakes in the Ukrainian text of part 2 of Article 26 of the Convention. It was decided to replace the words “terminate its force since the date when this Convention comes into force”, which in English version corresponds with “shall be terminated on the date that this Convention comes into effect”, by the words “terminate the force following the day of application of this Convention”. Thus the date of termination of legal force and the application of the Treaty dated 26 October 1982 are the date when the application of the Convention starts.

The Association would like to express its gratitude to the Ministry for Foreign Affairs of Ukraine for the constructive dialogue and productive cooperation and to all member-companies for their active participation and persistence in solving this issue. The Association will continue to work on problematic situations, in order to protect the legitimate interests of our members.

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