UPDATE 2: Cyprus says reaches agreement on taxation deal with Russia

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ATHENS/MOSCOW, Aug 10 (PRIME) -- Russia and Cyprus have agreed on amendments to an agreement on avoidance of double taxation, Cypriot Finance Minister Constantinos Petrides said on Monday in his Twitter account.

"Restoring confidence in economic relations between Russia and Cyprus, amendments to the agreement have been agreed upon with Deputy Prime Minister (of Russia Alexei) Overchuk. An important and mutually beneficial agreement," Petrides said following a round of negotiations between the countries being held in Moscow.

According to a statement of Russia’s Finance Ministry, Cyprus agreed to raise the tax on interest and dividends in the framework of the agreement with Russia to 15%.

"In the framework of the negotiations, Cyprus has agreed with the conditions of Russia to introduce changes to the Russian–Cypriot agreement on avoidance of double taxation in terms of raising the tax at a source on dividends and interest to 15%," the ministry said.

Deputy Finance Minister Alexei Sazanov said as cited in the statement, that a draft protocol was initialed. The protocol will be ratified until the end of 2020 and come into force from January 1, 2021.

The Russian ministry earlier said it had started the procedure to cancel the agreement on avoidance of double taxation with Cyprus.

Sazanov said, “Since the protocol was initialed today, the process of denunciation will be stopped.”

The official also said that the Finance Ministry expects additional tax collection to the Russian budget from the agreement at 130–150 billion rubles annually.

Russia plans to complete negotiations with Luxembourg and Malta in a month, asking for the same conditions as Cyprus, Sazanov also said.

The ministry also said that Russia soon expects to receive a response from the Netherlands regarding a recently sent letter on proposals to revise an agreement on avoidance of double taxation.

Russian President Vladimir Putin suggested in March imposing a 15% tax on dividend yield withdrawn to accounts in foreign jurisdictions, which would require adjustments in agreements on avoidance of double taxation with other countries. Russia will cancel such deals unilaterally if agreements on the matter with other countries are not reached.

(73.6376 rubles – U.S. $1)

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