Yesterday, negotiations between Russia and Cyprus on the new terms of the Double Taxation Avoidance Agreement were concluded. The Russian side announced the termination of the DTT denunciation procedure, which the Ministry of Finance had announced on its official website last week.
So, what will the new terms be:
Russia succeeded in increasing the withholding tax rate to 15% on dividend and interest income; royalties will continue to be taxed at 0%,
Exemptions with respect to dividend taxation are provided for certain public companies (regulated insurance companies, pension funds, etc.) – for them, withholding tax will be 0% or 5%, depending on additional conditions,
Exemptions with respect to interest taxation are provided for corporate and government bonds, as well as eurobonds – in these cases, interest will be taxed at 0%.
The parties plan to sign the updated agreement in the autumn; accordingly, the new rates will take effect from 1 January 2021.
With a high degree of probability, similar terms should also be expected in the DTTs with Luxembourg and Malta.
