Malta and Luxembourg have agreed to Russia’s proposal on the revision of agreements on avoidance of double taxation. As the message of the Ministry of Finance of the Russian Federation, the tax rate on interest and dividends will be increased to the required 15%. The fate of the agreement with Cyprus will be addressed in the negotiations on 10-11 August — after the recent announcement of the Ministry of Finance of the Russian Federation on withdrawal of the Cypriot side seems willing to make concessions.Russia will retain the agreement for avoidance of double taxation (DTT) with Malta and Luxembourg. As reported today by Russian Deputy Finance Minister Alexei Sazanov, these countries agreed to the Russian-proposed terms of renegotiation. The tax rate on dividends under the agreements with both countries is 5%, the interest is 5% under the DTT with Malta and 0% in Luxembourg. Russian Finance Ministry proposes to increase all rates to the Russian level — 15%.Question about adjustment agreements originated after March 25, Vladimir Putin has proposed to raise in them the rate of tax on such payments made in foreign jurisdictions. In case of disagreement foreign partners to do this the President has threatened a unilateral withdrawal from treaties. In April the Russian Ministry of Finance has notified Cyprus, Luxembourg and Malta the intention to amend the agreement to increase tax rates on income, dividends and interest. This week, a similar notice received in the Netherlands.As announced Alexei Sazanov, the negotiations with Malta and Luxembourg will be completed promptly after completion of negotiations on a tax agreement with Cyprus.In June–July, Moscow and Nicosia have already negotiated the revision of the agreement, but in the end, the Russian side stated that they “failed”. Then the Finance Ministry reported that Cyprus put forward a proposal, “blur and make unattainable the alleged Russian side effect” of measures to support the economy of the Russian Federation and will contribute to a tax-free transfer. In this context, on August 3, the Ministry of Finance announced the launch of the process of denunciation of the agreement with Cyprus.In Nicosia at the same time announced that they expect to keep an agreement, and announced the talks in Moscow, scheduled for 10-11 August. The Russian Ministry of Finance statement about another round of talks did not comment, but today announced their agreement to do so. Apparently, agreeing to continue negotiations after the statement about cancellation of the agreement, the Russian Ministry of Finance received from the Cypriot colleagues new and interesting proposals.Eugene Kryuchkov
