The protocol to the 1998 double tax agreement between Cyprus and Russia was ratified by Cyprus in September 2011. President Medvedev signed Russian Federal Law No. 9-FZ ratifying the Protocol on 2 March this year and now the only outstanding step in the ratification process is the exchange of formal instruments of ratification between the governments of the two countries. This is expected to take place before the end of 2012.
The protocol will take effect on January 1 of the year following ratification (apart from some elements regarding taxation of capital gains that do not take effect until four years later), which means that most of its provisions should take effect from January 1 2013.
Ratification of the protocol moves Cyprus closer to removal from the Russian 'blacklist' of offshore jurisdictions, allowing dividends received by Russian companies from subsidiaries in Cyprus to benefit from the Russian dividend participation exemption and further strengthening Cyprus's position as one of the most beneficial jurisdictions for Russian investment.
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