Purposes of double taxation treaties and interpretation of beneficial owner concept in Ukraine

Author:Pavlo Selezen
Position:Research Institute of Fiscal Policy, University of State Fiscal Service of Ukraine
Pages:26-36
SUMMARY

The term ?beneficial owner" has been interpreted by Ukrainian courts concerning the application of double taxation treaties’ provisions since the adoption of the Tax Code of Ukraine in 2010. Changing nature of the beneficial owner concept, its importance as an instrument for treaty shopping counteraction and the necessity of its proper interpretation in the Ukrainian reality are the main factors... (see full summary)

 
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Purposes of double taxation treaties and interpretation
of beneficial owner concept in Ukraine
Research fellow Pavlo SELEZEN
1
Abstract
The term ‟beneficial owner” has bee n interpreted by Ukrainian courts concerning
the application of double taxation treaties provisions since the adoption of the Tax Code of
Ukraine in 2010. Changing nature of the beneficial owner concept, its importance as an
instrument for treaty shopping counteraction and the necessity of its proper interpretation
in the Ukrainian reality are the main factors that have a strong impact on the development
of court practice concerning beneficial ownership. The article focuses on the prevention of
tax avoidance as one of th e purposes of double taxation treaties and its role in the
interpretation of the term ‟beneficial owner”. The analysis is based on the practice of the
Supreme Administrative Court of Ukraine on interpretation of the relevant provisions of the
Convention between the Government of Ukraine and the Government of Switzerland on
Avoidance of Double Taxation with respec t to Taxes on Income and Capital as of 30
October 2000.
Keywords: interpretation, purposes of international treaties, double taxation treaties,
beneficial ownership.
JEL Classification: K33, K34
1. Introduction
In one of its decisions the Supreme Administrative Court of Ukraine
admits that the term ‟beneficial owner” could not be interpreted in a narrow
technical sense. Its meaning ‟should be defined taking into account purposes, tasks
of international double taxation treaties” such as the prevention of tax avoidance
and such main principles as ‟the prevention of treaty provisions abuse.”
2
This
approach is shared by the State Fiscal Service of Ukraine.
3
The proposed approach provides that the prevention of tax avoidance is
one of the purposes of double taxation treaties. Is it true for all double taxation
treaties of Ukraine? Is the prevention of tax avoidance the purpose in all cases? The
1
Pavlo Selezen - Research Institute of Fiscal Policy, University of State Fiscal Service of Ukraine,
pselezen@i.ua .
2
Decision of the Supreme Administrative Court of Ukraine in case К/800/52155/13 of March 24,
2014, available online at: http://reyestr.court.gov.ua/Review/38106136 (accessed on September 29,
2017).
3
Letter of the State Fiscal Service of Ukraine No. 9033/7/99-99-10-02-02-17 of October 31, 2014,
available online at: http://www.profiwins.com.ua/uk/letters-and-orders/gna/5296-9033.html
(accessed on September 29, 2017).

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