Prime Minister
Mikhail Mishustin signed a directive to approve the protocol on amending the
Convention for the avoidance of double taxation in force between Russia and Malta. The draft federal law on the
ratification of the protocol will be submitted to the State Duma soon. After
approval by the lower chamber of the parliament, it will be reviewed by the
Federation Council and approved by the President.
Russia and Malta signed a
protocol on amending the Convention for the avoidance of double taxation in
early October 2020. It provides for an increase in the tax withholding rate to
15% on dividends and interest.
The protocol
provides for a number of exceptions, according to which a preferential tax rate
of no more than 5% will be applied to revenue in the form of dividends and
interest. Exceptions will apply to institutional investments. They are also
provided for public companies, at least 15% of the shares of which are in free
circulation, and which own at least 15% of the capital of the company paying
the above revenue during the year.
The exceptions
are due to the absence of the risk of such taxpayers using foreign
jurisdictions for tax evasion.
The revision of treaties
with foreign partners is being carried out as part of President Putin’s
instructions. In his address to the nation in March 2020, he pointed to inequitable
taxation of corporate revenue from offshore jurisdictions at rates that are
below personal income tax. The President ordered the adjustment of the agreements with such countries so that the revenue paid
abroad in the form of interest and dividends is taxed at the same rates as in Russia, that
is, 15%.
