Kyiv-Mohyla Academy Practical aspects of international tax planning involving Ukrainian businesses March

PwC Objectives of the course Slide 2 Introduction to International Taxation Understanding of key taxes affecting international business structures with Ukrainian involvement Understanding of the nature of double tax treaties Introduction into international tax structuring ideas Substance requirements for international structures The role of tax consultants in the international structuring process March 2014 Slide 2

PwC When international tax structuring is needed Slide 3 Introduction to International Taxation 1.International businesses entering the Ukrainian market 2.Ukrainian businesses expanding to the overseas markets 3.Ukrainian businesses need international financing / strategic investors, thinking of IPO March 2014 Slide 3

PwC Key taxes affecting international structuring Slide 4 Introduction to International Taxation Corporate income tax Withholding income tax Reverse charge VAT Capital gains tax Stamp duty / capital tax Personal income tax March 2014 Slide 4

PwC Tax concepts to be familiar with Slide 5 Introduction to International Taxation Tax residence / substance requirements Permanent establishment Beneficial ownership (withholding income tax) Place of supply (VAT) Offshore zones (“black lists”) Disclosure of information Double tax treaties network Tax rulings Thin capitalization rules Transfer pricing CFC / rules March 2014 Slide 5

PwC Double tax treaties Slide 6 Introduction to International Taxation Prevailing over the Ukrainian national legislation Overview of the treaty network Key provisions of the double tax treaties Permanent establishment Taxation of shareholders Capital gains Dividends Interest Royalties Services Non-discrimination Elimination of double taxation March 2014 Slide 6

PwC International tax structuring ideas (1 of 3) Slide 7 Introduction to International Taxation 1. Ownership set up Direct individual ownership vs. personal holding vehicles Ukrainian vs. international holding companies March 2014 Slide 7

PwC International tax structuring ideas (2 of 3) Slide 8 Introduction to International Taxation 2. Equity vs. debt financing Incentives for equity financing (capital contribution), and dividend distribution treatment Thin capitalization issues for debt financing Back-to-back loans Key considerations – financing arrangements at the start up stage and at the business development stage Returnable financial assistance option Ukrainian foreign exchange regulations Beneficial ownership test March 2014 Slide 8

PwC International tax structuring ideas (3 of 3) Slide 9 Introduction to International Taxation 3. Profits repatriation tools Dividends Interest Royalties Services March 2014 Slide 9

PwC Examples of international structuring ideas (1 of 3) Slide 10 Introduction to International Taxation 1.Pure Ukrainian structures 2.Involvement of low tax jurisdictions 3.Involvement of “moderate tax” European jurisdictions 4.Involvement of more “classical and attractive for bigger events” jurisdictions 5.Transparency issues March 2014 Slide 10

PwC Examples of international structuring ideas (2 of 3) Tax Evasion 11 September 2013

PwC Examples of international structuring ideas (3 of 3) Slide 12 Introduction to International Taxation Should not be ignored, and should be considered jurisdiction by jurisdiction Physical presence (registration, legal address, office/post box, shareholders meetings, board of directors, company secretary, book-keeping, auditors) Contracts and other documents signing Relocation of staff – may be an important issue Special arrangements for the decision making individuals in Ukraine Rulings in the overseas jurisdictions March 2014 Slide 12

PwC The role of tax consultants Slide 13 Introduction to International Taxation 1.Knowledge of local laws / interpretations / peculiarities 2.Knowledge of the international tax aspects 3.Understanding of the trends in the development of the Ukrainian and international practices 4.Prudent advice tailored to the Ukrainian environment 5.PwC is clearly the employment option for those of your who is interested in the above issues March 2014 Slide 13

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