Deductibility restrictions for royalty is in force from 1 April 2011

The Tax Code imposed restrictions for deductibility of royalty for the purposes of corporate profit tax (CPT) in Ukraine.

Starting from 1 April 2011 Ukrainian legal entities will be entitled to deduct royalty paid to non-residents to Ukraine in the amount that does not exceed 4 per cent of gross income of previous fiscal year.

Outgoing royalty (royalty paid to non-residents) is not deductible at all if:
- Royalty is paid to a person established in offshore jurisdictions;
- Royalty is paid to a person that is not the beneficiary owner of such royalty;
- Royalty is paid for an IP object that was registered for the first time on behalf of Ukrainian resident;
- Royalty is not subject to taxation in recipient’s jurisdiction.