On Wednesday, February 15 2012, the Russian Duma ratified the Protocol amending the Cyprus Russia Double Tax Treaty of 1998. The Protocol is now ratified by both signatories as Cyprus has already ratified the Protocol back in September 2011.
These are good news as Cyprus is now one step closer to be officially removed from the Russian ‘Black List’ and with the protocol that is expected to take effect from January 1 2013, dividends paid out by a Cypriot Company can be received in Russia totally exempt from taxation if certain conditions apply.
Another important change, which is brought upon is a special mechanism for exchange of information between the tax authorities of both states. Article 26 (exchange of information) of the Protocol is essentially identical to the OECD’s Model Tax Convention on Income and Capital and can be found in all modern tax treaties. It should not be seen as an unscrupulous tool allowing fishing expeditions by the Tax Authorities as certain safeguards are in place. For instance if the Russian Authorities would like to obtain information on a Cypriot Company, they would have to show detailed prior knowledge of the Company that they wish to investigate.
Indeed this new development is expected to greatly enhance business between Cyprus and Russia and thus further reinforce the economic and cultural ties between the two nations.
For further information please visit http://www.euglobal.eu