The Ukraine has introduced a restriction on deduction of royalties – a payment of royalties to a non-resident entity, even if it is an unconnected party at arm’s length, will be non-deductible if:
- the recipient is not the beneficial owner of the royalties;
- the IP rights to which the royalty relates have a Ukrainian origin; or
- the royalties are not subject to tax in the recipient’s country of residence.
Before the changes, the payer could deduct the royalty payment if they could show the payment was at arm’s length.