The Government of the Russian Federation will allow certain categories of payers to transfer taxes on dividends and interest to Cyprus at reduced rates. This follows from the new agreement on the avoidance of double taxation (DTT) with the republic (Izvestia has it). These will include Cyprus resident companies that entered the stock exchange through the island jurisdiction. To pay no more than 5% on dividends and interest on loans, they need to own 15% of the capital in a Russian company for more than a year. In addition, the share of free float in such companies must be at least 15%.
Theoretically, Tinkoff, QIWI, Global Ports, Global Trans, Rusagro and Headhunter will be able to take advantage of the privilege – depending on the interpretation of the Ministry of Finance and the tax authorities of individual clauses of the document.
In addition to them, governments, central banks, insurance institutions or pension funds will be able to apply for relief. Interest on government and corporate bonds will also be exempt from taxes, provided that they are quoted on the stock exchange.
On March 25, Russian President Vladimir Putin, in an address to citizens, announced an increase in the tax rate on the withdrawal of dividends abroad to 15%. Formally, it is now set at this level. However, thanks to agreements on the avoidance of double taxation (concluded by the Russian Federation with about 100 countries), business can optimize the level of payments up to 5%, and in some cases up to 0%.
Read more in the exclusive material of Izvestia:
The cream group: who will receive benefits under the tax agreement with Cyprus