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Russia And Malta Have Agreed To Raise The Tax On Dividends

Russia And Malta Have Agreed To Raise The Tax On Dividends

Russia, following Cyprus, agreed to increase the tax on dividends with another transit jurisdiction - Malta.

The parties agreed on a draft Protocol on amendments to the Convention between the government of the Russian Federation and the government of Malta for the avoidance of double taxation and the prevention of tax evasion concerning taxes on income dated 24 April 2013.

The two countries " agreed to raise the withholding tax rate on income in the form of dividends and interest to 15% with exceptions for a limited list of institutional investments," the Russian Finance Ministry said.

At the end of March, Russian President Vladimir Putin proposed to introduce an increased (15%) tax on dividends that are withdrawn to foreign accounts. This measure was announced in an appeal to the country's citizens as part of the"anti-coronavirus package." To do this, in particular, it is necessary to adjust the agreements on the avoidance of double taxation with the so-called transit jurisdictions.

The Russian Finance Ministry was the first to notify the Finance ministries of Cyprus, Luxembourg, and Malta of changes to the bilateral agreements in terms of raising the tax rate on income in the form of dividends and interest.

Russia was already ready to denounce the agreement with Cyprus, but the final round of negotiations held earlier this week was successful. Deputy Prime Minister Alexey Overchuk said that the Russian Federation might also initiate a review of agreements with Switzerland and Hong Kong.