Moscow to Ditch Popular Tax Treaty With Cyprus
13/08/2020
In campaign against offshorization, Russia will hike taxes on businesses sending profits overseas.
Russia will pull out of a double taxation treaty with Cyprus after Cypriot officials refused to agree to Moscow’s demands over a new business tax regime, Russia’s Finance Ministry said Monday.
In a statement the Finance Ministry said Cyprus did not agree with Russia’s plans to levy a new 15% tax on dividend payments which flow from Russian businesses to parent companies incorporated in Cyprus.
The new tax was first outlined by President Vladimir Putin as a measure to help cover the costs of the coronavirus pandemic by clamping down on Russian firms sending their profits overseas to minimize tax payments in Russia.
It is due to come into force next January, but requires Russia to amend various bilateral agreements with other countries.
The mediterranean island is a popular legal base for Russian firms due to its low corporate taxes, privacy laws, legal system based on English law, and status as a member of the European Union.
The Russian government estimates that almost two trillion rubles ($27 billion) of corporate earnings flowed from Russia to Cyprus in 2019 alone.
Tax experts told Russian news site RBC it will be less profitable for Russian firms to incorporate in Cyprus should the tax treaty be abandoned, but they expect the two sides to strike some kind of agreement before the end of the year.
Moscow’s plans to target capital outflows to low-tax jurisdictions have also surprised foreign firms based in Russia, who use dividends as a legitimate way of sending profits from their Russian arms back to their parent companies.
“This is an issue which is very important, and we are following it very closely,” Tadzio Schilling, chief executive of the Association of European Businesses (AEB) recently told The Moscow Times.
“We need to make sure that by doing what they want to do, or by achieving what they want to achieve, there is no collateral damage.”
https://www.themoscowtimes.com/2020/08/04/moscow-to-ditch-popular-tax-treaty-with-cyprus-a71052
The Team
Meet the team of industry experts behind Comsure
Find out moreLatest News
Keep up to date with the very latest news from Comsure
Find out moreGallery
View our latest imagery from our news and work
Find out moreContact
Think we can help you and your business? Chat to us today
Get In TouchNews Disclaimer
As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.
As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.