The suspension of certain provisions of the agreements to avoid double taxation with the USA, the EU countries - including Cyprus - as well as other characterized "unfriendly states", is imposed by a presidential decree, signed on Tuesday by the president of Russia Vladimir Putin and it was officially released.
According to the decree, the decision was taken "on the basis of the necessity of adopting urgent measures", due to the "unfriendly actions of certain countries", which is why tax agreements with a number of countries and their specific articles are listed, which are suspended "until elimination by foreign states of violations of the legitimate economic and other interests of the Russian Federation, the rights of its citizens and legal entities" or until the expiration of the relevant agreements.
In fact, in Presidential Decree No. 585, which comes into force with today's publication on Russia's official legal information portal, the Russian government is assigned "to take measures to reduce the impact on the Russian economy from the consequences of the suspension of the said tax agreements" and to submit the relevant bill to the Russian State Duma (Lower House), while in particular the Ministry of Foreign Affairs of Russia is instructed to "inform foreign states of the decision taken".
The presidential decree specifically states that Articles 5-22, 24, 27 and 29 of the Agreement between the Government of the Russian Federation and the Government of the Republic of Cyprus for the avoidance of double taxation with respect to taxes on income and capital are suspended. , which was originally concluded on December 5, 1998.
In mid-March, the Ministries of Finance and Foreign Affairs of Russia addressed the country's president, recommending the suspension of double taxation agreements with all countries that have imposed sanctions against Russia. According to the Russian Ministry of Finance, in this case the application of reduced tax rates or tax exemption in relation to incomes covered by double taxation agreements will be suspended from the moment of the issuance of the relevant decree, as reported by the state news agency TASS.
As he later explained, always according to the TASS, Deputy Minister of Finance Alexei Shazanov "for natural persons the rules regarding the avoidance of double taxation will remain in force, as in the treaties the articles, which provide for reduced tax rates for interest and dividends".
According to the presidential order, for example, "the provision of the treaty with the United States, under which persons located in one of the two contracting states may use as a set-off credit against income tax the same tax paid in the other country, remained "untouched", reports TASS.
According to information from KYPE, during the preparation of today's decree in the previous months, the relevant Russian ministries had consultations with a number of countries, including the Republic of Cyprus, with the Russian side committing to take into account special conditions and other reasonable objections of the contracting parties, by which articles of the agreements for the avoidance of double taxation are suspended.
KYPE