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Finance Ministry set to stop money outflow to low-tax jurisdictions

The minister promises to close 5-6 tax havens before the year-end.

Ukrainian Finance Minister Oleksandr Danylyuk has promised to close the loopholes for the withdrawal of national capital to 5-6 low-tax jurisdictions like Austria, the Netherlands or Luxembourg.

In an interview on Sonya Koshkina's Left Bank TV show on Channel 24, Danylyuk said his ministry "without having any global concept" is taking steps to cut the opportunities for the drainage of capital to low-tax jurisdictions.

"In fact, the money does not go directly to offshores. First it arrives in a jurisdiction, with which Ukraine has bilateral agreements on preferential terms. Those are the countries like the Netherlands, Austria, Luxembourg etc.," the minister explained. "But immediately after that the capital heads to offshores. We have committed ourselves to close five or six jurisdictions of the kind."

Danylyuk said he was confident that low-tax countries would agree to review bilateral agreements as they had pledged to fight tax evasion as part of their commitments under OECD membership.

"All the signatories [to OECD] must implement these measures before the end of 2017, i.e. if bilateral agreements envisage rates below the recommended, they will have to raise them up. It is a two-way process, it's just that we are moving a little bit faster," he said.

The minister also commented on media reports about his offshore companies to say that prior to the appointment as finance minister, he headed a large fund that worked in different jurisdictions, hence offshore companies were a "corporate necessity."

"In the year 2009, this issue was closed," said Danylyuk.