On April 1, 2020, Russia has notified Cyprus authorities of amending the terms of the current Double Tax Treaty between the countries.
According to the Russian Prime Minister, “It has been resolved to proceed with implementation of the instructions on taxation of the dividends withdrawn to foreign bank accounts”, with the relevant agencies due to provide suggestions for the subsequent steps till April 24.
The Ministry of Finance further clarified that the so called ‘Dividend Tax’ will apply to profits starting from the year 2021. The changes will not affect interest returns on Eurobond loans, bonded loans of Russian companies or loans provided by foreign banks.
It is worth noting that the President of the Russian Federation has earlier suggested to set a 15% tax on dividends withdrawn to offshore jurisdictions. He has also declared that Russia is prepared to pull out of the agreements with the countries which would not approve of such measures.
M. Target tax specialists will keep monitoring this topic and remain at your disposal for any professional comments or clarifications.