Russia Launches A Denunciation Of The Double Taxation Agreement With Cyprus
Russia launches the denunciation of the double taxation agreement with Cyprus on August 3, according to the Ministry of Finance of the Russian Federation.
"To execute the orders of the President of the Russian Federation on taxation of income from dividends and interest paid from the territory of the Russian Federation to the Republic of Cyprus at the rate of 15%, the Finance Ministry on August 3, this year begins the process of denunciation of the agreement," - stated in the message of the Ministry.
The Ministry of Finance notes that it considered the proposals of Cyprus unrealizable when making changes to the tax agreement. "The Ministry of Finance of Russia held talks with the Ministry of Finance of Cyprus to amend the Russian-Cypriot agreement on the avoidance of double taxation in terms of increasing the withholding tax to 15% in respect of dividends and interest. During the negotiations, Cyprus has put forward its proposals, which after analyzing, the Ministry of Finance of the Russian Federation concluded that they blur and make unattainable the Russian side estimated the impact of the measures taken to support the national economy and social programs, and contribute to a tax-free withdrawal from Russia through the Cyprus jurisdiction considerable financial resources of Russian origin," - said the Russian Ministry.
Negotiations between Russia and Cyprus to change the agreement on the avoidance of double taxation did not yield results, said state Secretary-Deputy Minister of Finance of the Russian Federation Alexey Sazanov. "In June-July of this year, we negotiated with our Cypriot colleagues regarding the revision of the agreement to avoid double taxation between Russia and Cyprus, so that from January 1 next year, most interest and dividend payments from Russia to Cyprus would be taxed at source at the rate of 15%. Unfortunately, today we must admit that the negotiations did not yield results. Therefore, today we are launching the process of denouncing the agreement on the avoidance of double taxation between Russia and Cyprus," Sazanov said.
He stressed that the restructuring of its holding structures through Cyprus would become unprofitable, while it will be more profitable to transfer these structures back to Russia. According to Sazanov, the government will make the jurisdiction of administrative regions more attractive for transferring holding structures to Russia. "We will now improve the legislation in the part of administrative regions to make these jurisdictions more attractive for the transfer of holding structures back to Russia," he said.