Finance Ministry welcomes tax agreement with Russia

THE MINISTRY of Finance has welcomed the approval by the Russian government of an agreement on the avoidance of double taxation initialled between the two countries earlier this year.

In April Cyprus and the Russian Federation initialled an agreement to avoid double taxation between them, paving the way for Cyprus’ removal from the Russian tax black list.

The existence of double taxation agreements between two countries presupposes the exchange of tax declarations by non-residents in either country.

It’s understood the Russian government was concerned over the possibility of Russian nationals laundering ill-gotten gains through the island by taking advantage of the local lack of income tax controls for non-residents. Meanwhile the presence of a double taxation system acted as a disincentive to legitimate Russian businesses who might want to set up shop here.

According to a press release yesterday from the Finance Ministry, during a meeting held in Moscow between House President Marios Garoyian and Russian Prime Minister Vladimir Putin, the former was told the Russian government has approved the signing of the agreement.

The agreement is expected to be submitted to the Russian State Duma for final ratification.

“The pressure on the government of Cyprus to renegotiate the existing ‘Agreement for the Avoidance of Double Taxation between Cyprus and Russia’ with the Russian government as well as the inclusion of Cyprus in the so called ‘black list’ of Russia, was probably the biggest problem we inherited at the Ministry of Finance”, said the ministry’s press release.

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