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Australia and Ukraine signed a new tax treaty – the Convention between the Government of Australia and the Government of Ukraine for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance.
Once it enters into force, it will be the first tax treaty between the 2 nations.
The Australian Treasurer signed the treaty and its associated Protocol on 16 October 2025 in Washington, USA.
A tax treaty with Ukraine reduces withholding tax rates on dividends, interest and royalties. This will encourage cross‑border trade and investment. Reducing tax barriers creates new opportunities for Australian businesses to access Ukrainian capital and technology.
The treaty will give Australians who earn income here and in Ukraine:
- more certainty
- lower compliance costs.
Key features and benefits
Tax certainty
The treaty will allocate taxing rights from cross‑border dealings between Australia and Ukraine. This helps businesses looking to expand into Ukraine and other Australian taxpayers deriving income from Ukraine by:
- reducing tax barriers
- improving tax certainty
- relieving double taxation.
Lower withholding tax rates on dividends
The treaty will provide a general withholding tax rate of 15 per cent on dividends. Intercorporate dividends on non‑portfolio holdings of at least 10 per cent will get a 5 per cent rate.
There will be an exemption for portfolio dividends derived by:
- governments (including government investment funds)
- central banks
- tax‑exempt Ukrainian‑recognised pension funds
- Australian superannuation funds
- other Australian residents carrying out complying superannuation activities.
This lowers Australia’s default rate (30 per cent) by at least 15 per cent for Ukrainian businesses. This will encourage them to invest in Australia.
It reduces Ukraine’s current rate (18 per cent) by at least 3 per cent for Australian businesses investing in Ukraine. This will lower the cost of doing business for Australians in Ukraine.
Lower withholding rates on interest
The treaty will provide a general withholding rate of 10 per cent on interest.
There will be an exemption for interest derived by:
- governments (including government investment funds)
- central banks
- tax‑exempt Ukrainian pension funds
- Australian superannuation funds
- other Australian residents carrying out complying superannuation activities.
Interest derived by a financial institution will get a 5 per cent rate if it is unrelated to and dealing wholly independently with the payer.
This lowers Ukraine’s current rates (18 per cent) by 8 per cent for Australians investing in Ukraine.
Australia’s rate will stay at 10 per cent for all other Ukrainian investors.
Lower withholding rates on royalties
The treaty will provide a rate of 10 per cent on royalties.
This reduces Australia’s default rate (30 per cent) by 20 per cent. This makes it cheaper for Australians to access Ukraine’s intellectual property.
It lowers Ukraine’s current rate (18 per cent) by 8 per cent. This incentivises Ukraine to use more Australian intellectual property.
Protection over natural resources
The treaty maintains Australia’s source country taxing rights over income from natural resources. This includes income from operating substantial equipment.
Tax certainty for pensions
The tax treaty provides that only the recipient’s country of residence can tax non‑government periodic pension payments (superannuation). This means Australia can tax non‑government pension payments where a Ukrainian citizen retires in Australia.
The source (paying) country may tax any pension lump sum payments from:
- certain pension funds
- retirement benefit schemes
- certain life events (for example: retirement, invalidity, injury, disability or death).
This will prevent some tax avoidance cases. It will allow Australia to tax eligible termination payments paid by Australian employers and pension funds.
If Australians or Ukrainians retire in the other country and get pension payments that would have been tax‑exempt if they had stayed in their home country, the payments will still be exempt in their new country of residence.
Maintains domestic anti‑avoidance rules
The treaty provides that both countries can still apply their own laws to prevent tax evasion or avoidance. This maintains the integrity of Australia’s tax system.
Prevents multinational tax avoidance
The treaty includes important integrity provisions to prevent tax evasion and avoidance. These provisions align with the outcomes of the Group of 20 (G20) and Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting project.
Rules for exchanging taxpayer information
The treaty will make sure rules relating to exchanging taxpayer information align with:
- Australia’s existing policies
- international obligations.
Rules to resolve tax disputes
If taxpayers believe they are or will not be taxed according to the treaty, the treaty will enable them to take a case to the relevant tax authorities. It requires Australia and Ukraine to try to resolve the issue by mutual agreement.