Certainty has been restored after the negotiations surrounding the amendment of the double tax treaty between the Republic of Cyprus and the Russian Federation were concluded. Briefly the key points are as follows:
1. The Increase of the withholding tax (“WHT”) on income from dividends and interest to 15% respectively;
2. The reduction of the aforementioned WHT (to nil or 5% as appropriate) of regulated entities, as well as listed entities with specific characteristics;
3. The exemption from the said WHT applies on interest payments from corporate bonds, government bonds and Eurobonds;
4. The maintaining of zero (0%) WHT on royalty payments.
The parties to the Agreement aim to sign the Agreement in the Autumn of 2020 with legal effect as from 1 January, 2021.
Interestingly, as certainty is restored between the Russian Federation and the Republic of Cyprus in the area of double taxation, uncertainty now looms over Russia’s agreements with its other treaty partners in light of Russia’s policy to enhance government revenues.
