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Cyprus To Be Removed From Russian Blacklist

by Tatiana Smolenskaya,, Moscow

08 November 2012

The Russian government has published an Order in the nation's Official Gazette to provide for the removal of Cyprus from the nation's 'blacklist' of non-cooperative 'tax havens' from January 1, 2013, when a Protocol to the nations' double tax agreement becomes effective.

The conclusion of the Russia's domestic ratification procedures in respect of Cyprus's removal from the blacklist comes after years of negotiation between Cypriot officials and the Russian government. These talks began back in 2008 when Cyprus was added to a 'blacklist' of 54 countries after Russian authorities deemed it to be an 'uncooperative territory' that had historically failed to share tax information with Russia.

The 'blacklist' was part of an amendment to the Russian tax code which introduced a tax exemption on the repatriation of dividends from foreign subsidiaries of Russian companies, but specifically excluded Russian subsidiaries based in territories and countries on the blacklist. Many European countries, such as Ireland, Luxembourg and Switzerland successfully lobbied the Russian government to be removed from the blacklist, but Cyprus has remained on the list.

Cyprus's scheduled removal comes after the signing of a Protocol to Cyprus-Russia double tax agreement just over two years ago, in October 2010. The agreement includes a number of changes to the tax treatment of income derived from economic activity between the two nations, and adds provisions in line with the Organization for Economic Cooperation and Development's internationally-agreed standard on tax information exchange.

TAGS: Russia | tax | investment | business | double tax agreement (DTA) | interest | royalties | law | offshore | tax planning | withholding tax | Cyprus | dividends

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