Domestic business is threatened by the loss of the historic “tax haven” – Cyprus. The Russian government intends to terminate the agreement Nicosia, which not only allows you to drastically reduce the fiscal burden on entrepreneurs, but also to avoid double taxation. Working with decades of legal schemes of tax evasion does not suit Moscow. But the problem is that in case of breach of the agreement may suffer not so much individual companies or physical persons, how much Russia in General: it will be a crushing blow to its investment appeal.
Signed in 1998, the agreement with Cyprus allows you to legally reduce taxes paid abroad dividends and interest on loans to 5% and 0%, 15% and 20% respectively. President Vladimir Putin has demanded from 2021 to raise rates in tax treaties to 15%, or to terminate them. In turn, the Cypriot Ministry of Finance proposes to maintain the rate, the more stringent the control over circulating in the Russian capital. According to the Bank, in 2019 the Russians have invested in local companies $14.5 billion and in return received $8.1 billion of direct investment.
a Steady reputation as a “financial Paradise” for Cyprus was formed long ago. Up to 60% of the GDP of the island Republic is the financial sector, and at least 15-20% of them consists of direct relevance to Russia. Here, low taxes, and the purchase of real estate or businesses can obtain citizenship. According to leading analyst of TeleTrade Mark Goichman when in 2012-2013, an island nation covered a severe crisis, it really helped to get out of this scrape money Russians that were stored in banks and amounting to tens of billions of euros.
I Understand why now our government went straight for Cyprus: there is a huge concentration of Russian money, partly due to geographical accessibility and convenience. Four hours on the plane and you’re there. Not every offshore zone gives you that opportunity. The business is constantly having a situation require the personal presence of a person to open an account, to sign a document or something else, says senior analyst of “Finam” Sergey Drozdov. According to his observation, when domestic stock markets, funds of non-residents (de facto owned by the Russians), the lion’s share comes from Cyprus. The gap tax agreement with this country will force businesses, accustomed to certain preferences, search for alternative options. To break the trend is unlikely one will not sit idly by. Moreover, there is a large international law firms spetsializiruyutsya on the provision of such services.
it Seems that the actions of the Russian authorities in relation to Cyprus are stacked in a series of attempts to get at least some additional income in ��the budget, says Professor, faculty of world economy and policy HSE Alexei Portansky. The pandemic crippled the economy, the projects “fly”. And in General, from a previously planned, little is implemented. Therefore, the authorities and go with the vacuum cleaner on all possible corners, scraping the corners. But there is nothing revolutionary in this, the richer we definitely will not, says the interlocutor of “MK”.
we Expect our government not only will make Cyprus less favorable jurisdiction, but by a combination of factors – to reduce the investment attractiveness of Russia. Tougher taxes less benefits for shareholders, says investment Manager at “OTKRITIE Broker” Timur Nigmatullin. Moreover, according to him, the problem lies not so much in the tax rates, but in the Russian system flaws. Such as insufficiently effective, very bad mood, in need of reforming the judicial system. In the annual ranking of Doing Business in this constantly focuses. Researchers in the West regularly indicate poor protection of property rights, as well as the fact that the Russian legislation (unlike a really high-quality English law) does not allow for a wide range of transactions. We are a developing country and offshore is very important for the normal functioning and structuring of its economy. If they are not, sums up Nigmatullin, no one wants to invest in Russia in the same volume.
