Russia is denouncing the double taxation agreement with Cyprus, the Russian Ministry of Finance announced on Monday.
Negotiations with the authorities of the island, which since the 1990s has become the main piggy bank of offshore capitals from Russia, have not been successful, the Ministry said in a press release.
The Russian side insisted on taxing 15% of the dividends that the business puts into the accounts of its parent Cypriot structures. Russian President Vladimir Putin gave such an order in May.
“During the negotiations, Cyprus put forward its proposals, analyzing which the Russian Ministry of Finance has come to the conclusion that in fact they erode and make unattainable the measures taken to support the national economy and social programs of Russian Federation. These proposals will also contribute to the tax-free withdrawal from the territory of the Russian Federation through the Cypriot jurisdiction of significant financial resources of Russian origin,” the Russian Ministry of Finance says.
According to the Ministry, last year 1.4 trillion rubles flowed to Cyprus from Russia, a year earlier – 1.8 trillion. In total, according to the Russian Central Bank, the Russians keep on the island more than 200 billion dollars – an amount that is 10 times higher than the Cypriot GDP.
The double taxation agreement makes the Cypriot jurisdiction a tax haven: the rate for dividend payments to Cyprus can be reduced to 5% or 10%, and interest on loans – up to 0%.
The Kremlinβs plan was to raise the bar to 15% from January 1. “Unfortunately, today we must admit that the negotiations have not yielded results. Therefore, today we are launching a process to denounce the agreement on avoiding double taxation between Russia and Cyprus,” Deputy Finance Minister Alexey Moiseev told Interfax.
Earlier, the Russian Ministry of Finance notified Malta and Luxembourg of its intention to amend the tax agreements. A bill to denounce the double taxation agreement with Malta is currently being prepared.
(C)UAWIRE 2020
No matter how hard the limping imp tries to help his economy or repatriate money it always fails. When will he get the message that nobody trusts his policies and they would rather keep their money under their bed than invest it in Moskovia or trust Moskovia banks?
Maybe he could make an example by taking his money out of offshore accounts. It shows how desparate the Russian economy is, when they are pleading with the mafia to bring back laundered money.
Ah but you forget Putler rule number one, laws are for thee not for me…
The Cyproitians would be foolish agreeing to a measure that would possibly cause so much money to be taken out of the country for the Ruskie mobsters surely would do so. As long as Ruskie money is outside of mafia land it will not help in the least mafia land’s economy. And, there is always a chance for the US confiscating some or all when necessary.