Russia begins the process of breaking the agreement on the avoidance of double taxation with Cyprus, reported on the website of the Ministry of Finance of the Russian Federation. The Cypriot Finance Ministry said in response that the reasons for the denunciation of the agreement with Moscow is not, and such a step would have negative consequences, reports “RIA Novosti”.”To execute the President’s order on the taxation of income from dividends and interest paid from Russia to the Republic of Cyprus at the rate of 15%, the Finance Ministry on August 3, begins the process of denunciation of the agreement”,— said the Russian Ministry of Finance. Earlier it became known that Russia is ready to terminate a similar agreement with Malta.As explained in the Ministry of Finance of the Russian Federation, Cyprus in the negotiations have put forward their proposals, which, in the opinion of the Russian side, “blur and make unattainable intended effect of the measures taken to support the national economy and social programs, and contribute to a tax-free withdrawal from Russia through the Cyprus jurisdiction considerable financial resources of the Russian origin”. Russia suggested a compromise and offered to negotiate this issue in Cyprus during the week, but was refused.For the duration of the agreement the Cypriot jurisdiction was used by many Russian companies. According to various estimates, Cyprus was removed in 2018 and more than 1.4 trillion. RUB., and in 2019 — more than 1.9 trillion. RUB Recall, in late March President Vladimir Putin has proposed to raise the income tax on dividends transferred to accounts abroad. Letter about changing the tax agreement was submitted to the authorities of Malta, Luxembourg and Cyprus in April. In June, the newspaper “Vedomosti”, citing sources reported that Russia’s negotiations with Cyprus on the change in the tax agreement have stalled, and the agreement itself may be terminated. Now the income tax on dividends transferred to accounts abroad, is 5-10%. Proposed by the Russian President, the new tax will come into effect in 2021 and will be 15%.Read more about termination — in the material “Kommersant” “the Cyprus has put on pause”.