A draft agreement between the Ukrainian and Belizean governments on the exchange of information on tax issues was approved at a cabinet meeting on June 19, 2013.
According to a report of the press service of the Income and Tax Ministry of Ukraine, referring to Minister Oleksandr Klymenko, the provisions of the agreement will allow the exchange of information at the request of authorities of the two countries, in particular, on banking information and information on the owners of companies, agents, nominal owners and authorized delegates.
The ministry said that the draft agreement was drawn up on the basis of a typical agreement of the Organization for Economic Co-operation and Development (OECD) on the exchange of information on taxation issues, and it is in line with the modern practice of information exchange with offshore jurisdictions. It is planned that similar agreements will be signed with other “classical offshore countries” – the British Virgin Islands, Antigua and Barbuda, Saint Vincent, Aruba and other.
Klymenko said he was confident that if the agreements are implemented by both sides, it will become easier to uncover schemes for avoiding taxation.
“After the signing of the agreement we’ll be able to obtain information on tax issues on request, including on banking transactions and accounts in banks of Belize. This is a large step forward in fighting the uncontrolled withdrawal of profits earned in Ukraine to offshore zones, on which the taxes were not paid to the Ukrainian budget,” the minister said.
“At the latest G8summit an agreement on principal on the creation of a global model for the automated exchange of tax information was reached. Ukraine should be part of the process. We should be actively involved in the global fight against the erosion of the taxation base and the switching of profit centers. The first step in this direction that we have to make is the implementation of national standards of transfer pricing,” Klymenko said.
The ministry said that on June 18, 2013, the leaders of the G8 at their summit in Northern Ireland signed a declaration on the improvement of the transparency of the global tax system. According to the declaration, an important instrument in combating tax evasion is exchange of information between jurisdictions. The G8 supported the work of the OECD and agreed to work to create a common standard for transnational corporations for reports submitted to tax agencies of all countries where they earn revenues and pay taxes.
According to the State Statistics Service, foreign direct investment to Ukraine from Belize as of April 1, 2013 came to $1.03 billion, or 1.8% of total foreign direct investment. Belize was 11th in foreign direct investment, ahead of Italy, Poland and the United States.
The British Virgin Islands are also a large investor to Ukraine – $2.24 billion or 4% of total foreign direct investment. They are seventh after Britain, ahead of France and Sweden.
The largest investor to Ukraine is Cyprus – $17.69 billion as of April 1, 2013, or 31.8% of all foreign direct investment. The Ukrainian government has for several years failed to sign a new agreement with Cyprus to avoid double taxation, to replace the agreement signed by the Soviet Union.
The top five largest investors to Ukraine also include Germany, the Netherlands, Russia and Austria with shares of from 11% to 6.1%.
