State Tax Service integrates the best global practices in international taxation

Integration of the best global practices in international taxation into the national tax system is a promising and extremely important direction for the State Tax Service of Ukraine. This was emphasized by acting Head of the State Tax Service of Ukraine Lesya Karnaukh during joint seminar organized by the Ministry of Finance of Ukraine with participation of the OECD experts and representatives of the State Tax Service of Ukraine.

According to her, opportunity to obtain practical tools in the international taxation will allow us to be prepared for equal, fair interaction with all business entities, regardless of their residency – both Ukrainian and other jurisdictions.

“It is important for us to be part of free world, to meet all the standards developed by the OECD experts over a long period of time. Such practical seminars allow us to understand what taxpayers in other countries are used to, what they are not used to, what needs to be done to make them feel comfortable in Ukraine, and, accordingly, so that taxpayers with Ukrainian residency feel confident in other countries of the world” – Lesya Karnaukh outlined.

Acting Head of the State Tax Service also noted that legislative changes, on which the State Tax Service’s team is working together with the Ministry of Finance of Ukraine, provide basis for application of the international taxation tools. For the State Tax Service, the best practical world experience is extremely important for achieving desired results in this direction.

Seminar participants considered:

‒ structure, objectives, principles and key concepts of the international tax treaties; main differences in approaches of the UN Model Convention and the OECD Model Convention;

‒ establishing status of tax resident (individuals and legal entities), in particular by determining place of effective management;

‒ distribution of tax rights between the “country of residence” and the “country of source” in terms of income types (dividends, salaries, director’s remuneration, etc.);

‒ mechanisms to prevent tax treaty abuse, including the General Anti-Avoidance Rules (GAAR) and application of the principal purpose test (“PPT”);

‒ elimination of double taxation, including through the mutual agreement procedure, etc.

Practical situations and relevant court cases regarding the international taxation matters were also analyzed.