Ukraine and Cyprus have signed the revamped intergovernmental agreement to avoid double taxation.

An Interfax-Ukraine correspondent has reported that the document was signed by Finance Minister of Ukraine Natalie Jaresko and Minister of Energy, Commerce, Industry and Tourism of Cyprus Yiorgos Lakkotrypis in the presence of the presidents of the two countries.

The sides signed a protocol amending the convention between the Ukrainian and Cypriot governments on avoiding double taxation and preventing income tax payment evasions.

The intergovernmental agreement on cooperation in higher education, the memorandum of understanding between the State Agency for Energy Efficiency and Energy Saving of Ukraine and the Ministry of Energy, Commerce, Industry and Tourism of Cyprus in the area of sustainable energy and energy efficiency were also signed in the presence of the two presidents.

The agreement of cooperation in the archives of the two countries has been signed.

As reported, on July 21, 2015, the Finance Ministry of Ukraine agreed with Cyprus to increase taxation rates for some types of passive income. The decision was reached after the second round of talks between Deputy Finance Minister Olena Makeyeva and representatives of the Cypriot government on July 2, 2015.

The ministry agreed with the Cypriot government on the signing of the new convention to avoid double taxation, which is in line with recommendations of the Organisation for Economic Co-operation and Development (OECD).

According to the agreements, only income received by Cyprus residents after shares, and other corporate rights are sold, over 50% of the cost of which directly or indirectly are linked to immovable property located in Ukraine, is exempted from taxation.

The Finance Ministry said that at present, the only demand for income to be exempt after the sale of the property of Cyprus residents is dependent on the location of the property in Ukraine.

In addition, taxpayers are to hold 20% in a company and invest at least EUR 100,000 in its charter capital to receive the right to apply the 5% tax rate when paying dividends, while today it is enough to meet only one of these conditions.

The sides also agreed to increase the interest rate tax, from 2% to 5%.

If the new convention is signed and the Ukrainian and Cypriot parliaments ratify it, the new conditions for the taxation of passive income will take effect no earlier than January 1, 2019.