An Order published in Russia’s Official Gazette states that Cyprus will be officially removed from the blacklist of non-cooperative tax havens as of January 1, 2013, coinciding with the official commencement of the Protocol of Double Tax Treaty (DTT)between the two nations.
Cyprus was added to the blacklist in 2008 as one of 54 nations deemed by Russian authorities as uncooperative territories which historically failed to properly report tax information.
The removal of Cyprus from the Russian black list will allow the country to present itself to the Russian market for outbound investments. Investors will be able to benefit from attractive tax structures in Cyprus and receive dividends in Russia with favorable tax rates.
The DTT was agreed to in October 2010 and ratified in 2011 but was delayed due to issues of information disclosure. Positive effects of the Protocol include the removal of legal restrictions on the exchange of information and highly attractive withholding tax rates.
Investors in both countries welcome this change and analysts expect Cyprus’ standing as an offshore investment destination to improve.