RUSSIA: Bill on denouncing treaty with Netherlands to be submitted to lower house in February.

As published on tass.com, Tuesday 26 January, 2021.

MOSCOW, January 26. /TASS/. The bill on denouncing the double taxation treaty with the Netherlands may be submitted to the Russian State Duma (lower house) in February 2021, State Secretary, Deputy Finance Minister Alexei Sazanov told reporters.

"A public discussion is underway now, after which we will submit it to the Foreign Ministry and to agencies," he said, adding that the bill is being prepared "for submission to the State Duma in February."

Russian Finance Minister Anton Siluanov said earlier that Moscow "will not step back" regarding the issue of denouncing the double taxation treaty with the Netherlands.

In December, the Russian Finance Ministry announced the start of drafting a bill for denouncing the double taxation treaty with the Netherlands. Previously the ministry held several rounds of talks with the country’s Finance Ministry and offered the terms similar to those that were agreed earlier with Cyprus, Luxembourg and Malta, however, the talks were unfruitful.

The approach to changing the treaty offered by the Netherlands was not supported by the Russian side as it suggested that certain channels for withdrawing funds from the country will be maintained, Russia’s Finance Ministry noted.

The existing tax agreement with the Netherlands enables withdrawing profit from Russia paying the tax at an effective rate of 2-3%, whereas a respective rate in Russia is higher several-fold, for example, legal entities' dividends are subject to a 15% rate and interest to a 20% rate.

Russian President Vladimir Putin suggested at the end of March 2020 that the tax rate for dividends brought abroad to offshore jurisdictions be increased from 2% to 15%. The measure requires revision of double taxation evasion agreements with other countries. Russia will withdraw from agreements unilaterally in case foreign partners do not accept new conditions, the president cautioned.

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