Amendments to Tax Treaty with Cyprus

Russian Government has submitted the Protocol amending the Russia-Cyprus Double Tax Treaty to the State Duma for ratification. It was signed on October 07, 2010 during the visit of President Dmitry Medvedev to Cyprus. The Protocol seeks to tighten rules on tax breaks and information exchange.

Thus, the Protocol introduces the article ‘Limitations of Benefits’ allowing the Cypriot authorities to refuse tax benefits where ‘it was established … that the main purpose (or one of the main purposes) of the creation or existence of such resident was to obtain benefits’.

Article 26 (‘Exchange of Information’) of the amended treaty will extend the exchange of information between the countries to tax violations, not just to information about taxes as it is currently the case. Banks and other financial institutions, nominee shareholders, agents and trustees will not be able to refuse giving information to the authorities.

The amendments will come into force on January 1 of the year following ratification