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Ukraine’s parliament ratifies Multilateral Instrument convention

Source : 112 Ukraine

The Multilateral Instrument convention allows making the necessary changes to the existing international treaties on double taxation between Ukraine and other states
19:05, 28 February 2019

Verkhovna Rada session dedicated to the Fifth anniversary of start of Russian aggression in Ukraine, Feb. 19, 2019
Twitter of Svyatoslav Tsegolko

The Verkhovna Rada of Ukraine has ratified a multilateral convention (Multilateral Instrument or MLI) on the implementation of the events, concerning tax treaties to prevent base erosion and profit shifting. 231 MPs supported it, as Interfax-Ukraine reported.

The Multilateral Instrument convention allows making the necessary changes to the existing international treaties on double taxation between Ukraine and other states.

According to the explanatory note to the draft law on ratification of the convention, Ukraine plans to apply to its bilateral agreements the provisions of the voluntary provisions of the MLI, in particular, the anti-abuse rule for permanent establishments situated in third jurisdictions and artificial avoidance of permanent establishment status.

Related: Ukraine's government adopts decree on creation of State Tax, Customs Services

Ukraine joined MLI in July 2018. By signing and ratifying this document, Ukraine simultaneously performs two of the four necessary steps of the base erosion and profit shifting (BEPS) action plan: preventing the abuse of benefits provided for in bilateral treaties, and improving the mutual agreement procedure by resolving disputes. The remaining two steps are the improvement of measures to combat tax abuse and recommendations on documentation regarding transfer pricing and disclosure of information by country.

At the moment of signing the convention, Ukraine was the 83rd jurisdiction that joined MLI.

Ukraine had joined the enhanced cooperation program under the OECD initiative on January 1, 2017. OECD member countries have developed an action plan to combat the erosion of the tax base and profit shifting. The BEPS plan includes 15 steps in various areas of countering aggressive tax planning. Mandatory for implementation by Ukraine (the BEPS minimum plan standard) is the implementation of four of them.

Related: Chemistry of discord. Why Tax Service blocks import of fertilizers to Ukraine?

The revision of the conventions with each country separately, the signing of protocols and their further ratification in parliament is a complex and lengthy process. For a more rapid revision of international conventions, the 15th step of the action plan was developed – MLI.

As we reported European Union, European Bank of Reconstruction and Development, World Bank and Energy Community strongly support the necessity of transit from the existing “green tariff”, acting in Ukrainian legislation, to the competitive system based on the “green” auctions

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