On 2 May 2022, the Cabinet of Ministers of Ukraine initiated draft law ‘On the Denunciation of the Settlement with the Russian Authorities on the Avoidance of Double Taxation of Earnings and Property and the Prevention of Tax Evasion’, as a response to Russian military aggression against Ukraine.

When passed, the Bill on Denunciation will suspend preferential tax treatment for Russian residents (both natural persons and legal entities) receiving income in Ukraine. Specifically, after adoption of the Bill on Denunciation, the following changes will go into effect:

  • all Ukrainian-sourced income of residents of the Russian Federation will be subject to general tax rates according to the Tax Code of Ukraine, instead of currently effective preferential tax regimes established by the Double Tax Treaty;
  • Ukrainian residents operating in Russia will no longer be able to offset taxes paid in Russia against liabilities due in Ukraine;
  • Ukraine is no longer obliged to exchange information with Russia on tax issues.

The Bill on Denunciation has been sent to the Parliament of Ukraine for further consideration.

For more information on the legal framework for counteracting raids under martial law in Ukraine, contact your regular CMS advisors or our local experts:

Olga Belyakova
Partner, Kyiv CMS CMNO
T +38 044 391 3377
E olga.belyakova@cms-cmno.com

Viktoriia Stavchuk-Mulundkar
Senior Associate, Kyiv CMS CMNO
T +38 044 391 3377
E viktoriia.stavchuk-mulundkar@cms-cmno.com

Anna Pogrebna
Partner, Kyiv CMS RRH
T +380 44 500 1718
E anna.pogrebna@cms-rrh.com