Expert: Russian capital will not flow from Malta due to tax changes
Malta, unlike Cyprus, will not lose its appeal to Russian investors even after the revision of the tax agreement with Russia, as this jurisdiction Russians were more likely to choose to obtain European citizenship, rather than to do business, commented Mikhail Begunov, lawyer and managing partner of Tax Compliance, to RIA Novosti.
"The revision of the double taxation treaty between Russia and Malta will not have much impact on business. This is due to the fact that Malta is not such a popular jurisdiction, respectively, its attractiveness even with the new conditions of interaction will remain at approximately the same level. Moreover, Cyprus has always been considered a favorable jurisdiction for doing business, and Malta has often acted more as a country for obtaining a second citizenship. Therefore, we should not wait for the outflow of Russian business from Malta yet," Begunov said.
On Friday, the Russian government approved a draft protocol on amendments to the convention for the avoidance of double taxation with Malta: tax on dividends and interest will be raised to 15%. Prime Minister Mikhail Mishustin also instructed the Ministry of Finance to conduct negotiations with the Maltese side and sign the protocol amending the tax agreement. Russia has already signed such a document with Cyprus in early September.
At the same time, the expert admitted that Russia's actions to amend agreements with offshore jurisdictions indicate a certain policy of the Russian authorities. "In the near future the terms of tax cooperation with foreign jurisdictions will change, which means certain innovations for business", - noted Begunov.
In late March, Russian President Vladimir Putin instructed to tax 15% of dividend and interest income transferred to accounts abroad. This requires adjustment of double tax treaties with other countries. The President warned that Russia would unilaterally withdraw from such agreements with countries that would not accept its proposals.
The relevant notifications were first sent by the Ministry of Finance to Cyprus and then to Luxembourg, Malta and the Netherlands. At the beginning of August the Deputy Prime Minister of RF Alexey Overchuk said that the same proposals could be sent to Switzerland and Hong Kong..
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