Russia demands renegotiation of the Double Taxation Agreement between Cyprus & Russia

The Russian Deputy Finance Minister has officially informed the republic Of Cyprus that the double taxation treaty between the two countries needs to be renegotiated, otherwise Russia will withdraw unilaterally.

Russian’s goal is to have all interest and dividend payments leaving Russia to incur a 15% tax. Until now, Cyprus incurred a 5% minimum tax rate on dividends. This will undoubtedly have a strong impact on Cyprus’ economy.  The Russian Deputy Finance Minister remarked that the dividend tax will be in force in 2021 and that the changes will affect only the alleged transit jurisdictions with lowered tax rates.

Russia is planning to put into effect the above amendment to double tax treaties with all its treaty partners to reflect this unilateral decision but such amendment seems to be more of a procedural matter without leaving much room for negotiation.