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

129 new cases, four deaths announced on Saturday

The Health Ministry announced the death of four persons due to COVID-19. This raises the death toll from the virus in Cyprus to 183,...

Crowding at Troodos; lots of fines by police

Lots of traffic was today seen at Troodos. In order to maintain order but also to monitor that people respected the measures aiming to...

Where to get antigen rapid tests on Sunday 24 January

The Health Ministry announced the following antigen rapid test sites for Sunday, 24 January 2021:   LIMASSOL Parking place Lidl supermarket, Limassol 08:30-16:30 Glafkos Clerides Park, Germasoyia 08:30-16:30 Municipal...

Larry King dies at 87

Larry King dies at 87. Photo taken at his concert at Hard Rock Live in Hollywood, Florida on January 25, 2012. (Reuters)

Russia: Vladivostok police detains Navalny supporters

At least 35 Russians were detained on Saturday (January 23) in the Far Eastern city of Vladivostok at a rally for the release of...


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...