The practice of granting citizenship in exchange for investment - the so-called "golden passports" - should be abandoned after Cyprus in other offshore jurisdictions, including Malta, which is popular among Russians, said Yulia Pavlova, chief tax adviser at Tax Compliance law firm, to RIA Novosti.

"Restrictions on obtaining citizenship in Cyprus are most likely due to the current lack of demand for "offshore schemes", as well as tighter control over nominal structures. Similar restrictions can be expected in Malta, which also issued citizenship in the case of minor investments in the country's economy, as well as in offshore countries," - said Pavlova.

Cyprus Council's proposal to cancel the investment program on Tuesday was announced by the official representative of the Cypriot government Kyriakos Kousios. According to him, this decision is associated with long-term shortcomings, as well as numerous abuses on the part of the program participants. The decision will come into force on November 1, 2020.

The opportunity to obtain a passport in exchange for investment exists in many countries. The second passport allows the owner to visit many countries without a visa, and in some cases - even save on taxes. Some countries with such programs, such as the U.S. or Austria, have set sufficiently high entry thresholds for investors and require potential participants to meet additional stringent conditions. It is much cheaper and easier to obtain the official status of a citizen in other countries - including Cyprus and Malta.

"Until recently, many Russian companies actively manipulated the creation of fictitious transactions with Cypriot residents to actually take profits to a more favorable tax jurisdiction. However, the use of complex corporate structures involving foreign interconnected companies can no longer serve as a mechanism for obtaining tax optimization. Improvement of automatic exchange of information between tax authorities of the countries of the world, toughening of control over nominal companies without operational activity contribute to gradual departure from the so-called "offshore" schemes", - noted Pavlova.

In particular, she reminded that Russia had revised the preferential taxation terms under double tax treaties, which allowed Russian residents to save on taxes when paying income as dividends or royalties to foreign investors. In addition, obtaining citizenship of Cyprus allowed individuals to save on real estate tax as well as to receive other preferences related to free movement and establishment of business in the EU countries.

The comment is placed in RIA Novosti