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Cyprus agrees to raise taxes for wealthy Russians
The tax from January 1, 2021 will increase by 15% for dividends and income transferred from Russia. The decision was made by Cyprus after discussing a proposal from Russia to amend the Agreement on the Elimination of Double Taxation (DTT).
 
Cyprus agrees to raise taxes for wealthy Russians
 
Result of the agreement with Cyprus

"The Cypriot delegation fully agreed with the conditions of the Russian side. We initialed the draft protocol, which should be signed in September 2020," said the head of the Russian delegation - Deputy Prime Minister Alexei Overchuk.

The ratification of the protocol should take place by the end of 2020, and the document will enter into force on January 1, 2021.

"Since the initiation of the protocol has taken place, we are stopping the process of denunciation of the agreement. In the next month, we also plan to complete negotiations with Luxembourg and Malta on the same terms as we offered Cyprus," said Deputy Finance Minister Alexei Sazanov.

Earlier, Cyprus announced its reluctance to raise taxes on the cash flows of the rich from Russia. Then the Ministry of Finance threatened to break off agreements on the exclusion of double taxation, which would worsen the conditions for Cypriot business in Russia.

But on August 7, Cyprus asked to resume negotiations.

The Ministry of Finance of Russia on August 3 announced the beginning of the procedure for terminating the agreement on the avoidance of double taxation with Cyprus. This agreement allowed wealthy Russians to pay paltry taxes to the Cyprus treasury, bypassing the Russian budget, and transferring revenues to the Cyprus offshore.

Net capital outflow from Russia by the private sector in the first half of 2020 increased by 24% compared to the same period last year and amounted to $ 28.9 billion, according to the Central Bank of the Russian Federation.

Russian President Vladimir Putin on March 25, in an address to the Russians, proposed a number of measures to support the economy and citizens of the country

The head of state proposed that all payments of income of Russians, which in the form of interest and dividends are withdrawn from Russia to foreign offshores, be taxed at a rate of at least 15%, as well as on income of foreigners in Russia. Putin suggested that these additional incomes be directed to payments to families with children, the unemployed and others in need.

Therefore, the President instructed to supplement these amendments with agreements on the avoidance of double taxation with a number of countries where income from Russia is withdrawn. Cyprus was one of the first such countries, as it has long been popular with wealthy Russians for withdrawing capital and avoiding taxes.

According to the Ministry of Finance, more than 1.4 trillion rubles were withdrawn to Cyprus in 2018, and more than 1.9 trillion rubles from Russia in 2019. This capital withdrawal is possible, since the rate on the payment of dividends to Cyprus can be reduced to 5% or 10%, and on interest on loans - to zero. This is more than two times less than the corresponding rate in Russia (13-15%). The Ministry of Finance proposed to the financial and tax services of Cyprus to increase the rates to 15% for both dividends and interest.
 
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    GDP of the world's countries 2019

    List of the IMF in billion. $.

      1 USA - 21482
      2 China - 14172
      3 Japan - 5220
      4 Germany - 4117
      5 India - 2957
      6 France - 2844
      7 Great Britain - 2809
      8 Italy - 2112
      9 Brazil - 1929
      10 Canada - 1820
    GDP per capita world countries 2017 (table)

    List of the IMF in $

      1 Luxembourg - 108004.9
      2 Switzerland - 79347.76
      3 Norway - 72046.29
      4 Qatar - 67269.64
      5 Macao - 61365.29
    The state debt of the countries of the world 2017

    Public debt of 2017 countries as a percentage of GDP

      1 Japan - 250,91
      2 Lebanon - 147,62
      3 Italy - 131,71
      4 Eritrea - 127,5
      5 Portugal - 127,33
      6 Cape Verde- 122,25
      7 Bhutan - 122,12
      8 Jamaica - 116,07
      9 USA - 107,48
      10 Barbados - 106,58
    Gold and currency reserves of the countries of the world 2017

    International reserves, billion USD

      1 China - 3080,7
      2 Japan - 1260,0
      3 Switzerland - 773,1
      4 European Union - 745,9
      5 Saudi Arabia - 492,9
      6 Taiwan - 444,4
      7 Russia - 419,9
      8 Hong Kong - 413,3
      9 India - 393,6
      10 Republic of Korea - 383,8

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