Directive No 2291-r dated 9 September 2020
The Government has approved the draft protocol on amending the Convention on Double Taxation with Malta. The amendments concern an increase in withholding tax on dividends and interest to 15 percent. The directive was signed by Prime Minister Mikhail Mishustin.
Agreements with foreign partners are being revised in line with President Vladimir Putin’s instructions. In his address to the nation in March 2020, the President noted that it was unfair to tax offshore companies’ income at rates below the personal income tax. The President gave instructions to amend agreements with such countries so that income paid abroad as interest and dividends would be taxed at the same rates as within Russia, which is 15 percent.
The protocol signed by Mikhail Mishustin lays out a list of exceptions with preferential treatment, setting the tax rate of 5 percent on income in the form of dividends and interest.
The list includes institutional investments as well as public companies, at least 15 percent of which are in public float and own at least 15 percent of the capital of the company paying the abovementioned income during the year. The exceptions reflect the absence of risk of such taxpayers using foreign jurisdictions for tax evasion.
The Ministry of Finance has been instructed to hold talks with the Maltese side in order to sign the protocol amending the Convention on Double Taxation.
On 8 September, Russia signed a similar document with Cyprus.