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Cyprus Tax News 16 February 2012

Cyprus-Russia Protocol to Tax Treaty Ratified by the Russian State Duma

The Protocol to the 1998 Double Tax Treaty between Cyprus and Russia signed during the Russian President’s official visit to Cyprus in 2010, has been ratified by the Russian State Duma on 15 February 2012. This follows ratification of the Protocol by the Cyprus government in September 2011. The Protocol is now pending the signature of the Russian President, Dmitry Medvedev. Once it has been signed, in accordance with the provisions stipulated by the Protocol itself, it shall come into effect as of 1 January 2013 (with some provisions that will have effect from 1 January 2017).

Ratification of the Protocol should result in the removal of Cyprus from the Russian “blacklist” of offshore jurisdictions. This would mean that dividends received by Russian companies from Cypriot subsidiaries can qualify for the Russian dividend participation exemption that will further strengthen the position of Cyprus as one of the most attractive jurisdictions for Russian investment.

Detailed analysis of the key amendments to the Treaty introduced by the Protocol is given in our Tax News of 7 October 2010 as well as Tax Alert of 12 October 2010.

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