Ukraine and Cyprus have reviewed the terms of an agreement on the avoidance of double taxation and the prevention of income tax evasion, which Kyiv inherited from the Soviet Union.

An Interfax-Ukraine reporter said that a respective agreement was signed in Nicosia on Thursday with the participation of Ukrainian President Viktor Yanukovych and President of Cyprus Dimitris Christofias.

Finance Minister Yuriy Kolobov signed the agreement on behalf of Ukraine.

He told journalists that the talks on the subject had been held since 1997.

“And this year, we finally achieved a certain compromise. We made concessions. We signed [the agreement with] much better conditions than those with Russia, and it gives us an additional UAH 1 billion in budget revenues per year,” he said.

Kolobov said the new agreement would have small variations in four areas – in particular, royalties, interest, dividends and the disposition of property.

He said that following the signing of the agreement, it would be “convenient” for investors from Cyprus operating in Ukraine to pay taxes.

As reported, the current agreement with Cyprus on the avoidance of double taxation provides no tax on royalties and dividends, which is actively used by Ukrainian businessmen, while formalizing the ownership of Ukrainian assets through Cyprus companies.

According to the State Statistics Service, the residents of Cyprus are the largest investors in Ukraine: $14.52 billion as of July 1, 2012, or 27.7% of total foreign direct investment in the country. They are followed by German companies: $7.4 billion, or 14.1%.

INTERFAX