About a week ago Russian Duma (the lower house of Parliament) has approved the double taxation agreement with Cyprus. The project was first introduced to the members of Duma as early as the end of June last year. At the moment the agreement is awaiting its signing by the President of Russian Federation.

This document removes Cyprus jurisdiction from Russia’s “black list” of uncooperative territories. The black list was introduced following the introduction of amendment in the tax code, that allowed to repatriate dividends from foreign subsidiaries of Russian companies tax free. The companies in jurisdictions from the black list could not use this rule of the tax code.

The double taxation agreement signed in October 2010 was quickly ratified in Cyprus, but the Russian Federation took some time before doing the same.

The most important part of the agreement lies in the provision of tax information exchange between the authorities of two countries. The information exchange procedures are based on the model proposed by the OECD. The document covers every tax in both countries.

It is planned that the agreement will take effect on January 1 2013.
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Sources:
Tax-news.com: Russian Duma Ratifies Cypriot DTA Protocol (21 February 2012)
Russian Duma’s official website