Insider Economy Russia's bid to raise tax revenue a blow to Cyprus

Russia’s bid to raise tax revenue a blow to Cyprus

Moscow is determined to repatriate Russian capital and increase tax revenue and a shocking measure announced by the country’s leader last week is aimed primarily at Cyprus, Phileleftheros reports.

Russian President Vladimir Putin has declared that all interest and dividend payments leaving Russia will incur a 15% tax. And that all double taxation treaties will now have to be renegotiated, otherwise Russia will withdraw from them unilaterally.

An advisory by Russia’s Finance Ministry clarified that the planned increase in the withholding tax rate for income in the form of dividends and interest will only apply to so-called conduit jurisdictions.

Companies are usually set up in such jurisdictions specifically for the purpose of applying reduced tax rates provided for in double taxation treaties.

The measure will primarily affect Cyprus, where the minimum tax rate on dividends has been 5%, as well as a number of other similar jurisdictions such as the Netherlands.

The changes will not affect interest income payable on Eurobond loans, bond loans of Russian companies or loans made by foreign banks.

The changes are expected to come into effect on January 1, 2021 and will not apply to income paid from the Russian Federation in 2020.

A 15% rate currently exists for dividends paid to jurisdictions with which Russia has no tax treaty.

Payments to entities in tax treaty partner countries are usually taxable at reduced rates of 5% or 10%.

Russia has over 80 tax treaties but does not have them with countries traditionally characterized as tax havens.

However, since amending the terms of current tax treaties is normally a long process, it is not yet clear how this measure will be implemented in practical terms.

By Demetra Landou

Read more:

Cyprus aims to become the bridge between Kazakhstan and Europe





















Top Stories

Russia’s Lavrov in Athens to discuss East Med regional issues

Russian Foreign Affairs Minister Sergei Lavrov on Monday is paying a working visit to Athens, Greece, with special attention to be paid to the...

Police hand out 81 fines over covid-19 measures violation

Police booked 78 individuals and three establishments all across Cyprus over the past 24 hours for violation of measures to contain the spread of...

Mainly fine on Monday, dust in the air

Mainly fine on Monday with variable light to moderate winds, force two to three Beaufort. The sea will be smooth to slight. Temperatures will rise to...

UK special forces storm tanker and detain stowaways in Channel

British special forces stormed a Greek-operated oil tanker in the English channel on Sunday to wrestle control of the vessel from seven stowaways who...

Family of dead man after gastric bypass surgery shout medical neglect

A 36-year-old obese man died days only after undergoing a gastric bypass surgery in a private clinic in Limassol in mid-October and his family is shouting...


Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...


No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...