Nicosia met with a lack of understanding of Moscow’s proposal to raise taxes for Russian residents of Cyprus to 15%. Businesses may face double taxation and higher rates.
The current agreement on the avoidance of double taxation with Cyprus - the most popular low-tax deployment among Russian entrepreneurs - Russia intends to break, write Vedomosti. The negotiations between the two countries are at an impasse, according to the sources of the publication, indicating that Cyprus did not agree to the proposal of the Russian side to increase the current rates in tax agreements to 15%.
In turn, Cyprus proposes to maintain rates, but to tighten control over foreign structures of Russian business, so that technical layers could not save on taxes.
If negotiations and further negotiations do not break the deadlock, then Russia will be forced to initiate the adoption of laws to denounce the agreement this fall.
The current agreement provides that the payment of dividends in favor of Cyprus residents from Russia can be reduced to 5% or 10%, and by interest on loans - to zero.
If Russia quits the deal, then all payments to residents of Cyprus from Russia will be taxed in accordance with the Russian Tax Code - at a rate of 15% (dividends) and 20% (interest and royalties). Russian companies and individuals who received income from Cyprus will suffer, because taxation of payments will be carried out under the laws of Cyprus.
Recall that Russian President Vladimir Putin on March 25 proposed abolishing tax rates "for those who withdraw their income in the form of dividends to foreign accounts".
According to the Bank of Russia, in the first nine months of last year, Russia invested about 13.5 billion in Cyprus. It received $ 4.8 billion in direct investment.
Recall that previously the island state tightened control over gray money from the Russian Federation.