Discussions have commenced between Australia and Ukraine to create a tax treaty that could potentially provide leverage for investments in Ukraine once the current Russian intrusion ends. Vasyl Myroshnychenko, Ukraine’s ambassador to Australia, has been personally advocating for the treaty in high-level interactions with the treasury officials over the past weeks, aiming to terminate the practice of “double taxation” on a single source of income.
As it presently stands, Ukrainians operating businesses or working in Australia face taxation in both nations, a circumstance that also applies vice versa. The absence of a treaty design to address this issue is seen as a discouraging factor for potential investors in Ukraine, as higher tax rates are imposed.
This development was confirmed by Mr Myroshnychenko himself during a recent Business NSW event in Sydney. The ambassador stated with satisfaction that while initially the government did not demonstrate much willingness to begin negotiations due to lack of negotiating capacity, they have since resolved to move forward with discussions involving the Ukrainian finance ministry. Often such negotiations last about a year, following which ratification is sought from both parliaments, he explained.
Therefore, it is crucial to have this agreement designed to avoid double taxation in order to stimulate investments. Mr Myroshnychenko has been consistently encouraging the Australian government for tax alterations that would assist Ukraine in its post-conflict reconstruction.
Australia has established over 40 such tax treaties dealing with the issue of double taxation, Russia included. However, Ukrainian business officials’ request for negotiations in November 2022 was rejected by the Treasury, attributing it to an exhaustion of negotiation capacity.
Striking an optimistic note, Mr Myroshnychenko has characterised a tax treaty as an “opportunity” for the resurrection of Ukraine. However, he also sees it as an avenue for Ukrainians to economically contribute to Australia as he believes, it could lead to a surge in Ukrainian investments. According to him, the proposed tax agreement is not just pivotal for the initiation of certain investments in Ukraine, but is equally significant for the trading services.