Russia Ratifies Double Tax Treaty With Brazil

by Tatiana Smolenskaya, Tax-News.com, Moscow

08 January 2009

The Kremlin announced the ratification of its convention with Brazil for the avoidance of double taxation and fiscal evasion with respect to income tax on January 6.

The lower and upper house of parliament approved the convention on December 24 and December 29, respectively. Russian President Dmitry Medvedev then signed it on January 6.

The ratification of the convention will boost bilateral trade between the two countries and will help reduce tax impediments to trade and investment. Within the scope of the agreement both countries have agreed to exchange information surrounding tax matters.

Speaking in November when the Russian President travelled to Brazil to discuss bilateral relations ahead of the ratification of the treaty, Brazilian president Luiz Silva hailed relations with Russia stating:

“Brazil and Russia are much closer than the geographic distance may imply. Both countries have huge territories and populations, intricate and large economies and unique cultures.”

“Today, President Medvedev and I have noted the current promising stage in our relations. The bilateral trade turnover has more than tripled since 2003 and topped the USD6bn mark this September. Brazilian companies operate in Russia and export their products from Russia to neighbouring countries. Apart from Brazil, Russia is the largest consumer of Brazilian meat. But our bilateral trade turnover and investment flows can and must expand still further.”

“Russia could supply equipment for new companies now being opened in Brazil. We also hope that Russia, an experienced railway builder, will help construct railways and the required infrastructure in Brazil.”

In response, Russian President Dmitry Medvedev said “[Russian-Brazilian] trade has reached USD6bn but I hope to increase this figure this year and soon arrive at around USD10bn. However, our trade should not continue to develop according to the current, very simple, scheme, when we exchange commodities or Brazilian agricultural products for Russian mineral fertilisers. It should become increasingly based on high technologies and include new interesting projects.”

“I am referring above all to energy projects. During my meeting with Mr President, and before that during my visit to Petrobras, Brazil’s largest energy company, we agreed to step up cooperation in that sphere.”

“We have agreed to encourage mutual investments in energy, which I have mentioned, and also in other spheres. We have the necessary mechanisms for this, including intergovernmental ones, but we should also stimulate cooperation within the Russian-Brazilian Business Council and between our largest companies. They should cooperate, creating new forms of business organisation and thereby promoting foreign trade.”

“We have discussed opportunities in banking and the financial sphere. We will have to take measures to prevent the crisis from destroying our achievements in mutual trade of the past years. We must create financial support mechanisms that will help us maintain the high level of our relations and strengthen them.”

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