24/07/20

INTERNATIONAL TAX: Moscow Hopes For Productive Dialogue On Avoiding Double Taxation With Cyprus.

As published on urdupoint.com, Thursday 23 July, 2020.

MOSCOW (UrduPoint News / Sputnik - 23rd July, 2020) Moscow hopes for a productive dialogue with Cyprus and to reach an acceptable solution on amendments to a bilateral agreement sought by Russia to avoid double taxation following the decision to impose a 15 percent tax on dividends transferred to foreign bank accounts, Yuri Pilipson, the director of the Russian Foreign Ministry's Fourth European Department, told Sputnik in an interview.

To implement the initiative proposed by Russian President Vladimir Putin, the Foreign and Finance Ministries were instructed to determine the list of treaties on avoiding double taxation that Russia has concluded with other states and ensure that they are amended to pave the way for the new tax rule. In early April, the Russian embassy to Cyprus confirmed that Moscow had sent a letter to the island nation with a request to change the agreement and respond by June 15.

"Consultations are underway, and three rounds have already passed. At the same time, the current articles of the agreement and the established international practice allow the termination of the intergovernmental agreement if it is not possible to reach a deal.

However, we look forward to a productive dialogue and an acceptable solution," Pilipson noted.

In late March, Putin proposed a 15 percent tax on dividends received by Russian nationals and then transferred to foreign bank accounts, noting that it would require adjusting Russia's double taxation avoidance agreement with other countries. Putin added that Russia would unilaterally exit any such agreement if its offers were not accepted. Later, Prime Minister Mikhail Mishustin said that Russia had sent to the Cypriot government a letter concerning the adjustments.

The Russian embassy in Nicosia has said Russia has chosen Cyprus among the first countries to start the talks on amending the taxation agreement, since the island nation accounts for 34 percent of cumulative direct investment in Russian economy.