Russia, Cyprus Sign Protocol on Amending Tax Agreement

Russia and Cyprus signed a protocol on Tuesday amending the intergovernmental agreement on the avoidance of double taxation with respect to taxes on income and capital, TASS writes.

According to the Russian Ministry of Finance, on behalf of Russia the document was signed by State Secretary, Deputy Finance Minister Alexei Sazanov, and on behalf of Cyprus – by Finance Minister Constantinos Petrides.

“The protocol should be ratified before the end of this year, so that the provisions of the protocol begin to apply from January 1, 2021,” the Russian Finance Ministry reported. The document was signed in the presence of Russian Foreign Minister Sergey Lavrov and Minister of Foreign Affairs of Cyprus Nikos Christodoulides.

Lavrov noted that the agreement on the avoidance of double taxation was signed back in 1998, and today it is time to upgrade it.

“Our Ministry of Finance conducts such work with all our partners with whom we are bound by the same agreements, and these efforts are aimed at ensuring that the investments made by our companies, our citizens, are indeed used to implement specific projects that bring practical benefits,” he explained.

According to the approved protocol, the tax levied on dividends and interest should not exceed 15% of the total amount of dividends. In some cases, dividend tax can be up to 5%, in particular if the person entitled to the dividends is a foreign insurance company or a pension fund, as well as a local authority or central bank. The protocol will enter into force in 2021.

Negotiations with Cyprus began in June, and on August 3, the Russian Finance Ministry announced that an agreement could not be reached and the procedure for denunciation of the agreement was launched. Later, the Cypriot government announced that it expects to settle the issue of amendments to the agreement with Russia. On August 10, at the talks in Moscow, the amendments were settled.

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