On 25 April, in Kiev, BDO in Ukraine and BDO in Cyprus held a joint conference “Cyprus in the international tax planning and building corporate structures”. The topical subject of the event brought together about 80 representatives of investment, commercial, industrial, agricultural companies and financial institutions. Chief executives of companies, managers, CFOs, corporate lawyers from different regions of Ukraine got together to listen first-hand information about amendments and trends of the Cyprian legislation.

Karlos Zangoulos, managing partner of BDO Cyprus, opened the conference with the report, in which recent changes were stated in tax and corporate law. He noted that the purpose of tax changes was the need to arrange the financial system, suffered from the global financial crisis. The changes influenced mainly local businesses, while the impact on international companies has been minimized. In considering the agreement between Ukraine and Cyprus, Mr. Zangoulos noted that the expected date of coming into force of the new agreement is 2013-2014. Ukrainian companies will need to increase tax substance. For example, the company is a tax resident and therefore subject to Cyprian tax, if the management and control is carried out in Cyprus, i.e. the place of effective management of the company is located there, and main administrative and commercial solutions made.

At the same time the Cyprus tax authorities have very subtle approach and generally consider all entities as residents of Cyprus, unless stated otherwise. Special attention of Mr. Zangoulos was paid to new perspectives that are opening due to the reserves of natural gas discovery in Cyprus. Thus, the growth of such sectors as construction, sea transportation and logistics, financial industries are expected. Tax rates will fall as gas revenues and taxes from the new industries will create a budget surplus. This will lead to increased confidence in the stability of the financial services, which will further establish the reputation of Cyprus as an international business center.

Sergei Moliboh, managing partner of BDO Legal Ukraine, in turn, told about the concept of the international structuring. Thus, the structuring objectives are asset protection, reducing the tax burden, the optimization of external financing, etc. The financial benefit from the international structuring was calculated as an example.

Tax Partner of BDO in Ukraine, Viktor Nevmerzhitsky finished the formal part by the report on the tax implications resulted from income payment to non-residents. In his presentation he outlined the requirements to the "beneficial owner", dividend payment, royalty deduction restrictions, the transfer pricing rules and responsibility for the tax law violations.