Aug 9, 2023

Russia suspends key provisions of 38 Double Tax Treaties, including Cyprus

Russia suspends key provisions of 38 Double Tax Treaties, including Cyprus

As stated in the Announcement published by the Ministry of Finance of the Republic of Cyprus, a Decree on the Suspension of the Validity of Certain Provisions of International Treaties of the Russian Federation on Taxation Issues was signed by the Russian President on 8th August 2023. The Decree, in effect from the date of its publication[1], is suspending the application of certain provisions of 38 Double Taxation Avoidance Agreements (DTTs) with countries considered as unfriendly states, including the United States, Japan, the member-states of the European Union, as well as Cyprus.

Quoting the above announcement, “the Decree states that the DTTs are suspended until the elimination by foreign states of violations of the legitimate economic and other interests of the Russian Federation, the rights of its citizens and legal entities. The suspended Articles of the Cyprus-Russia DTT are Articles 5-22, 24, 27 and Article 29.”

“In view of the prohibitions already put in place by the Russian Federation, on the export of foreign currency and payments to jurisdictions it considers hostile due to the sanctions imposed on it, which include Cyprus, and the sanctions imposed on the Russian Federation which resulted in the suspension of any extensive economic/trade relations with European States, it is not expected that there will be any further consequences from the non-application of the Double Taxation Avoidance Agreement.”

“The Ministry of Finance also wishes to assure that as a member of the EU, the Republic of Cyprus did not have the opportunity for any consultations on this matter, nor was there any prior consultation with the competent authorities of the Russian Federation regarding the possibility of suspending the Agreement or issuing a decree by the Russian Federation.”

For more information on the suspension of DTTs in Russia and how these measures can affect you and your business, please contact us on [email protected]

[1] New tax regime is applicable for the income paid as of 8th August 2023.

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