Nowhere else to save: Russia raises taxes on dividends
On August 10 and 11, the Cypriot Ministry of Finance held a meeting with Russian representatives on the amendment of agreements on the avoidance of double taxation. At the moment, the tax rate on the payment of dividends to foreign companies is 15%, on interest — 20%. The agreement between the countries allows companies to receive benefits and reduce dividend payments to 5% or 10%, and percent to zero.
A few days earlier, the Russian Ministry of Finance said that negotiations with Cyprus had not led to a result, and therefore it is planned to denounce the agreement. This news astonished many entrepreneurs.
However, according to the latest news, it became known that Cyprus nevertheless accepted the conditions of Russia, the amendments have already been agreed by the parties. From the moment the amendments are adopted, the tax rate will be 15% for dividends and interest on loans.
The plans to increase taxes were first announced by President Vladimir Putin in March. However, he also clarified that the innovations will be discussed with the departments of other countries. Cyprus became the first country to be negotiated with. The Russian Ministry of Finance proposed to immediately abandon the benefits, but Cyprus didn’t agree. As a result, the Russian government began to denounce the agreements.
At the moment, entrepreneurs are awaiting decisions based on the results of negotiations with other jurisdictions. Many of them are concerned that by September the business will not be able to take advantage of any benefits at all.