The Cabinet of Ministers of Ukraine has approved a draft law on the ratification of the Convention on the Elimination of Double Taxation and the Prevention of Tax Evasion, concluded between Ukraine and Australia. This was reported by the Ministry of Finance of Ukraine, citing RBC-Ukraine. The document aims to define exactly how the income of citizens and companies with economic ties between the two states will be taxed, and to exclude situations where the same income is taxed simultaneously in both jurisdictions.

What exactly the Cabinet of Ministers approved

The draft law approved by the government lays the foundation for the convention to enter into force after its consideration and adoption by the Verkhovna Rada and the completion of domestic procedures in both countries. According to the authors' intent, the convention will create a clear legal framework for the distribution of tax rights: it will determine which state has the right to tax the income of a resident if it is received from sources in another country. The scope of the document will include business profits, dividends, interest, royalties, as well as income from employment.

Rates and types of income

The convention establishes maximum tax rates for certain types of income in the state from which they originate. For dividends, a rate of 5% is provided if the beneficial owner is a company owning at least 10% of the capital of the company paying the dividends; in other cases, the rate will be 15%. For interest, the rate will be 5% for certain financial institutions specified by the convention and 10% in other cases. The royalty tax rate is fixed at 10%. At the same time, the application of reduced rates is possible only if the recipient of the income is its actual beneficial owner, a resident of one of the contracting states, and meets other requirements of the document.

Protection of business and citizens

For businesses, the new rules should ensure more predictable conditions for cross-border operations and investments, reducing uncertainty regarding the tax burden. The document affects not only the corporate sector: for citizens, the convention creates additional guarantees against double taxation of income related to work, education, investments, entrepreneurial activity, pension payments, and other economic ties between the two countries. As a general rule, income from employment is taxed in the state where such work is actually performed, subject to the exceptions provided for by the convention.

Information exchange mechanisms and dispute resolution

In addition to the distribution of tax rights, the convention contains mechanisms for the exchange of tax information, assistance in tax collection, and a mutual agreement procedure. These tools should help states properly apply tax rules, combat tax evasion, and resolve disputed issues between taxpayers and tax authorities. Separately, the document includes provisions on the prevention of abuse, in particular the Principal Purpose Test (PPT) principle, aimed at combating artificial structuring of transactions for tax benefits.

Timeline and ratification status

The convention was signed on October 16, 2025, in Washington. Now, the draft law on its ratification must be considered by the Verkhovna Rada. The document will enter into force after the completion of domestic procedures in Ukraine and Australia and the exchange of diplomatic notes between the parties. To date, Ukraine has similar double taxation elimination agreements with more than 70 countries worldwide, and the signing of the convention with Australia expands this network. The material is for informational purposes only and does not constitute financial or investment advice.