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Announcement for the removal of Cyprus from the Russian “Black List”
Saturday, April 13, 2013
 

The Ministry of Finance of the Russian Federation has announced the removal of Cyprus from its "List of the States and Territories providing preferential tax treatment and (or) not requiring disclosure and furnishing of the information upon conducting of financial transactions (offshore zones)" appended to Order 108n dated 13

November 2007, with effect from 1 January 2013.

This will have an immediate positive impact on both inbound investment to Russia from Cyprus and outbound investment from Russia to Cyprus and globally.

• With effect from 1 January 2013, dividends paid from Cyprus companies to Russian companies will be exempt from taxation in Russia (subject to the normal holding conditions), benefiting from the Russian participation exemption that does not apply to dividends from countries on the Black List.

The normal holding conditions are as follows:

1. The recipient holds at least half the equity of the distributing entity and the participation confers the right to receive at least half of the dividend distributed;

2. The recipient has held the investment for at least one year at the time the decision is made to distribute the dividend; and

3. The cost of the investment is RUR 500 million (approximately €13.6 million) or more.

• The transactions of Russian companies with Cyprus companies will not be subject to the onerous transfer pricing provisions introduced with effect from 1 January 2013 for countries on the Black List. The standard transfer pricing regulations will continue to apply.

• Other possible Russian provisions being introduced with restrictive implications in respect of payments to companies in jurisdictions on the Black List will not apply to transactions with Cyprus companies.

• With effect from 1 January 2013 the "blacklist" of countries ineligible to benefit from the exemption will be: Andorra, Anguilla, Anjouan, Antigua and Barbuda, Aruba, Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Brunei Darussalam, Cayman Islands, Channel Islands (Guernsey, Jersey, Sark, Alderney), Cook Islands, Dominica, Gibraltar, Grenada, Hong Kong SAR, Isle of Man, Labuan, Liberia, Liechtenstein, Macau SAR, Maldives, Malta, Marshall Islands, Mauritius, Monaco, Montserrat, Nauru, Netherlands Antilles Niue, Palau, Panama, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and Grenadines, Samoa, San Marino, Turks and Caicos Islands, United Arab Emirates and Vanuatu.

Should you require more information regarding the above please to do not hesitate to contact us at: info@istosglobal.com or +357 22 256324.
 


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