Interlegal lawyers consulted the client upon income taxation

The client applied to Interlegal upon explaining procedure of taxation on income received by non-resident under the Agreement on arranging transportation. This project highlights old issues of repatriation tax and freight tax.

Interlegal tasks were the following:
1) to analyze the current legislation and today practice (at tax authorities and courts) upon the following issues: taxation subject, procedure and rates in respect of repatriation tax; specifications of freight tax accrual; grounds for release of taxation under the Double Taxation Treaty.
2) to grant recommendations for the client upon selecting the best tax rate and drafting the certifying documents for submission to tax authorities.

Since the non-resident company is registered in accordance with legislation of Cyprus, the consulting also clarifies the issue of applying the Convention between Cyprus and Ukraine, with regards to scheduled modifications in the law, namely ratification of the Multilateral Convention on taking measures related to tax agreements in order to prevent erosion of tax base and profit withdrawal from taxation (MLI – multilateral instrument).

Court practice analysis showed that the problem of freight tax is an eternal issue and was interpreted differently at different times by courts and tax authorities. However, a fair decision is being formed now: there is no tax on income received by non-resident under similar agreements.

Interlegal junior lawyer Viktoria Yankovskaya, associate attorney Marta Sverdlykivska, managed by partner Irina Voyevodina, led the case.