The Russian Federation announced the beginning of the procedure for denunciation of the tax agreement with Cyprus. Since negotiations to break the treaty from next year between Moscow and Nicosia have reached an impasse, Russia will have to withdraw from the agreement now.
According to RBC, this was stated by the Deputy Minister of Finance of the Russian Federation Alexey Sazanov.
The agreement was aimed at, so that entrepreneurs, working in Russia, but registered abroad, did not have to pay taxes twice. Its denunciation takes place on the initiative of Russian President Vladimir Putin. The head of state voiced it during one of the addresses, which he did quite often during quarantine.
Russian leader thinks, that double taxation treaties, prisoners with many countries, need to revise. He considers the situation unfair, when most of the income from dividends and interest is taxed abroad, and the Russian budget gets crumbs.
Now in Russia the tax on dividend payments is 15 percent. But if the company is a resident of Cyprus, then payments can be reduced to 5-10 percent, and the tax on interest on loans, which is 20 percent to zero altogether.
Because of this, Russian entrepreneurs were taken abroad to 2019 year 1,9 trillion rubles, What's on 0,5 trillion more, than in the previous year.
To get away from taxes, individual Russian companies were registered in Cyprus and transferred money abroad. After the termination of the agreement, it became unprofitable. Especially, that Russia is creating its own offshores in the Kaliningrad region and Primorsky Krai, where the tax rate on dividends will be reduced to 5 percent.
