Denunciation of the double taxation treaty with Ukraine

The Agreement on Avoidance of Double Taxation between Belarus and Ukraine, which was in force since 1994, was denounced by Ukraine.

The consequences of denunciation of the double taxation treaty with Ukraine are as follows:

1. income of tax residents of Ukraine derived from sources in Belarus will be subject to applicable taxes on a general basis under Belarusian law, and similarly income of tax residents of Belarus derived from sources in Ukraine will be subject to taxes on a general basis in Ukraine;
2. taxation at source of income does not exempt from the obligation to tax the income in the country of income recipient;

At the same time, the Belarusian legislation provides for the mechanism of offset for the taxes paid abroad but within the limits of the amount of tax on such income to be paid in Belarus. To apply it, it is necessary to provide the tax authority with a certificate issued by the competent authorities of Ukraine in confirmation of the payment tax amounts. In the absence of the certificate, individuals have the opportunity to provide a copy of the tax return of Ukraine, together with a copy of the payment document confirming the fact of payment.

3. impossibility of applying the provisions of the agreement on the procedure for determining tax residency, i.e. a person may be recognized as a tax resident of both countries in accordance with their legislation;
4. termination of the exchange of information between the relevant competent authorities of both countries.

Such a denunciation of the treaty in the history of Belarus for the first time. However, the suspension of certain provisions of double taxation treaties has already taken place. For example, Germany suspended its cooperation with Belarus on tax issues almost a year ago, i.e., the exchange of information between the tax authorities of the countries temporarily does not take place.