Rebuilding Ukraine: Thoughts on International Tax

As I write this post, Ukraine is under Russian fire. Multiple cities have been raised to the ground, thousands lie dead, and the only small consolation are the amazing speeches by President Zelensky. The attack on the Ukraine is terrible at so many different levels. This is Dresden on steroids.

Nevertheless, I’d like to look forward. Once Ukraine has won this war (which it will), there must be a massive amount of rebuilding and reconstruction. Much civil infrastructure has already been damaged or destroyed. This is about more than roads and bridges. Essential organisations such as the judiciary, the land register, and the tax authorities may also be at risk. This would be highly problematic; the ability to e.g. levy tax is essential (both practically and symbolically) for a sovereign state. Is there anything that we – tax experts, governments, the EU, a random American billionaire… – could do to assist the State Tax Service of Ukraine?

Two possible approaches

Now, this isn’t a highly original idea: if it can occur to a tax blogger in Holland, Ukrainian tax specialists will certainly be on the case. Nevertheless, I’d like to offer two approaches for assisting Ukraine.

  1. Support Ukrainian tax authorities
    The Ukrainian State Tax Service of Ukraine may require support, e.g. with practical issues such as IT systems or staffing. Or perhaps in relation to the Ukranian postal system (for sending tax assessments). Can we help with this? In the international context, there may be scope to help with the cross-border collection of tax on behalf of Ukraine or the sharing of information, depending on the wishes of Ukraine. 
  1. Offer (temporary) changes to bilateral tax treaties with Ukraine
    At present, Ukraine has 74 such treaties, including treaties with the Netherlands, Luxembourg and Ireland. Under certain conditions, these tax treaties restrict Ukraine’s right to levy tax on dividend, interest and royalties. Of course, this in itself need not be problematic. Nevertheless, it is conceivable that Ukraine would, in the post-war period, benefit from a (temporary) renegotiation or suspension of tax treaties to improve Ukraine’s position in this regard, maybe even considering the possibilities of a (temporary) tax sparing credit as a way to boost investment into Ukraine.  


About Anna Gunn

Fiscaliste met de specialisaties EU-belastingrecht en fiscale exotica. Geruime praktijkervaring met fiscale staatssteun.

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