Martial law in Ukraine increases the obligations of citizens to declare their income and assets to avoid accusations of tax evasion.
The introduction of the automatic exchange of tax information (CRS) between countries allows Ukraine to obtain data on the financial accounts of Ukrainian residents abroad, including Canada. This may result in demands for tax payments under Ukrainian legislation, even if the income has already been taxed in Canada.
The Law on Amendments to the Tax Code of Ukraine (2023) mandates the declaration of foreign assets, including income on foreign accounts.
Examples of Double Taxation:
- If a Ukrainian citizen residing in Canada owns property in Ukraine and earns income from it, they are obligated to pay tax in Ukraine, even if this income has been declared and taxed in Canada.
- Income from employment conducted in Ukraine is also subject to taxation in Ukraine, regardless of taxes paid in Canada.
- And many other specific cases.
Conclusion:
The automatic exchange of information between the tax authorities of Canada and Ukraine (CRS) strengthens oversight of Ukrainian citizens' income abroad, including those who pay taxes in Canada. Martial law in Ukraine imposes additional reporting obligations for Ukrainian citizens living in Canada, especially regarding assets and income sourced in Ukraine. Ukrainian citizens with assets or income originating in Ukraine must be prepared to pay taxes in Ukraine and respond to potential inquiries from Ukrainian tax authorities.
Information sourced from the official agreement between Canada and Ukraine:
https://www.treaty-accord.gc.ca/text-texte.aspx?lang=eng&id=102414
Oleksandra Melnykova, Immigration and Refugee Consultant in Canada.
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