“On Amendments to the Agreement between the Russian Federation and the Government of the Republic of Cyprus for the avoidance of double taxation with respect to taxes on income and capital from December 2012 7 year” In 2010 was ratified protocol on October 5 1998 years.
The provisions of the protocol provide for several changes in the tax regime between the two countries, including Art. 13 agreements governing the taxation of income from the alienation of property. The document was to take effect from January 1 2017 years, but the Cypriot and Russian Governments have agreed to the postponement, thus equalizing force. Edition of “successful business” was able to talk with the man who took direct part in the summit talks. Special Envoy of the President of Cyprus to Russia Sotos ZACKHEOS talks about how important it is for both jurisdictions, the compromise reached.
“The Cypriot government, adhering to the spirit of cooperation and supporting the policy of the Russian Federation the priorities agreed to postpone the entry into force as long as the same changes will be made in agreement between Russia and other European countries in order to achieve equal conditions of taxation regime for all EU countries.
The Russian authorities were negotiating the introduction of provisions similar to Art. 13, in an agreement on avoidance of double taxation and other jurisdictions, however, this process has proved problematic.
As a result, Cyprus and the Russian government held a series of meetings at the highest level in order to achieve mutual understanding on this issue and agreed to postpone the date of entry into force of the new provisions of the protocol.
Obviously, the prospect of revision of the tax regime for capital gains tax between Cyprus and the Russian Federation – in the absence of a similar agreement with other jurisdictions – could affect the mood of the Russian business community in Cyprus, prompting investors to transfer their activities to other countries, where such restrictions do not apply .
To resolve this issue, connect the President of the Republic of Cyprus Nikos Anastasiadis. He authorized me to assemble a delegation which included representatives of the Ministry of Finance at the highest level. We conducted a series of meetings with Russian officials, and as a result it was agreed to postpone the entry into force of the above provisions of the protocol. The authorities of both countries are working on additional draft document, which will complement the protocol of 2010 years, for the official resolution of a delay in the application of Art. 13 ».
One of the most important provisions of the revised Protocol states that the return on capital obtained from the sale of shares of the company, which is located in another jurisdiction, and more than 50% of which is property assets in other jurisdictions are taxed in another jurisdiction from January 1 2017 years. This allows the Russian authorities to use fair taxation scheme in respect of property located in the Russian Federation.