One of Malta’s most recent double tax treaties is with Ukraine. The treaty came into effect on the 28th of August, adding on to Malta’s vast network of double taxation agreements. To date, Malta holds over seventy double tax agreements with various countries and jurisdictions from around the world.
Malta Tax Regime
- The income tax
Income tax is charged on the gross income earned by an entity from its business activities within Malta
Ukraine Tax Regime
- The tax on profits of enterprises
Income tax is charged on the gross income earned by an entity from its business activities within Ukraine
- Personal income tax
Businesses resident in Ukraine will be taxed on trading profits they receive from their activities.
Who can benefit from the convention
- Maltese and Ukrainian citizens
- Any entity which resides in either Malta or Ukraine
As would be expected, the Malta-Ukraine double tax convention follows the Organization for Economic Cooperation and Development (OECD) model. However, there are a few deviations you might want to take note of.
Below are the Malta-Ukraine tax convention’s significant deviations from the OECD Model
- Permanent establishments
The term “permanent establishments” holds the same meaning as given in the OECD model except that in the Malta-Ukraine double tax convention—there were some additional undertakings which are considered to be permanent establishments despite them not in compliance with those listed in the OECD model.
- Global transport
Adding on to the OECD tax treaty model, the Malta-Ukraine double taxation agreement specifies that profits obtained from businesses operating in international transport (ships or aircraft) also include
- Profits derived from the rental on a bareboat basis of ships or aircraft
- Income obtained from usage or rental of containers(inclusive of trailers and similar equipment) which is utilized for the transportation of products or merchandise—whereby these respective activities are part of the operation of aircraft or ships.
How Maltese and Ukrainians benefit from the convention?
- Ukrainians can avoid double taxation by crediting Malta tax paid against any Ukrainian tax which was computed by reference to the same profits or income.
- The same applies to Maltese residents. They will also be allowed as a credit against Malta tax liability for all the Ukrainian tax they paid.
In the case that any of the two countries introduce new tax regimes, they will notify each other annually of any changes that may have transpired in their respective taxation regulations. Nonetheless, the Double taxation treaty will still continue to be relevant.
For a deeper and more detailed explanation of the Malta-Ukraine DTA, feel free to get in touch with our team at SIGTAX . Our expert team of lawyers, accountants and consultants is ready to assist you in each step. Our lawyers can provide you with finer details on the legal aspects pertaining to the double taxation system in Malta so that you don’t skip any necessary steps.