The Nigeria international, who arrived at San Siro last summer from Marseille, spent the second half of last season at QPR but he is now bound for the Ukrainian capital
The Nigeria international joined the Rossoneri on a free transfer from Marseille last summer but failed to settle at San Siro and spent the second half of the season at QPR.
Taiwo has previously expressed a desire to join Benfica, while he was heavily linked with Galatasaray in recent days.
However, he has now been farmed out to Kiev, who have the option to buy the player outright at the end of the 2012-13 campaign.
According to Sky Sport Italia, the Ukrainian outfit have agreed to pay Milan €500,000 to take the left-back on loan until next summer, but will hand over another €2 million in instalments over the following two years should they decided to make the move permanent.
Taiwo, who has made just four Serie A appearances last term, was linked with Real Madrid before signing for Milan.