Cyprus` President Nicos Anastasiades, assured that the government will facilitate every business and investment initiative involving the Russian Federation, speaking at the Conference titled “Recent tax developments: Russia – Cyprus and Global Tax Trends” organized by Cyprus International Business Association and Ernst and Young.
The President also welcomed the recent agreement between the state authorities of Cyprus and Russia to postpone the implementation of the Protocol amending Article 13 of the Double Tax Treaty with respect to taxes on income and on capital, until the introduction of similar provisions in the bilateral Double Tax Treaties of Russia with other European countries.
As a result of that agreement, gains derived by a Cyprus company from sale of shares in a Russian company that owns immovable property in Russia will continue to be taxed only in Cyprus without any taxing right for Russia, as in Cyprus profit from sale of shares is tax exempt.
The President further stressed that he is fully aware of the strict regulatory framework Russia applies and the need for transparency and accountability, pointing out that Cyprus was fully harmonized with European taxation regulations and with the Organisation for Economic Co-operation and Development Policy standards on fiscal transparency and exchange of information on taxation matters.
He also recalled his official visit at the Russian Federation in February 2015, saying that it constituted a milestone for reaffirming the reciprocal political engagement to qualitatively enhance the strategic relationship of the two countries, through the signing of a number of bilateral agreements, among others, in the fields of economic co-operation and on research and technology.
“I do hope, following my extension of invitation, that my visit will soon be reciprocated at the highest level, in order to explore new areas of beneficial cooperation, as well as deepen and enhance our existing collaborations, for the mutual benefit of our countries and our people”, he said.
Anastasiades also extended his satisfaction and gratitude for the vote of confidence, trust and faith of Russian people, and business Community, to Cyprus and its financial and economic system, particularly during the past four years and following the Eurogroup Agreement of March 2013.
“To this end, I can assure you that Cyprus will remain a reliable partner to all of you, especially since we are now emerging stronger than ever from an unprecedented crisis and our journey along the road to recovery has been faster than anyone could predict”, he said.
He also pointed out that a bilateral Cyprus – Russian Federation dialogue is in progress in order to address a range of economic issues, based on the established joint Intergovernmental Committee on Economic Co-operation whose last meeting took place in April in the presence of the Cypriot Minister of Finance. At the meeting, he added, both sides welcomed the rise of tourism, the liberalisation of air transport, as well as investment initiatives in agriculture and telecommunications.
In his presentation at the conference Taxation Commissioner Yiannis Tsangaris said that Cyprus boasts in a tax regime which is compliant with both, the spirit and the letter of relevant international tax regulations, and at the same time, it is competitive in the international tax arena, especially through its simplicity.
He noted that the Republic of Cyprus is confident that its tax regime and any related infrastructure in place, provide a sure and solid ground for foreign investors to do business in Cyprus at a competitive tax burden and at competitive other costs, as compared to other EU jurisdictions.
He also said that Cyprus legislation on anti-money laundering and counter-terrorist financing, is fully in line with the Financial Action Task Force (FATF) Recommendations, European Union Law and International Conventions.
He added that according to the Basel AML Index which is an independent not-for- profit organisation ranking countries according to their risk regarding money laundering and terrorist financing, Cyprus ranks 50th out of 149 countries, ranking above countries with more sophisticated control systems like the US and Germany. He also noted that according to a recent Report by Transparency International, the Moneyval’s and the FIUs’ reports render Cyprus as one of the most transparent countries.
Director of Economic Research and EU Affairs Directorate in the Ministry of Finance George Panteli, in his presentation at the conference, pointed out that during the past few months, the Authorities of Russia and Cyprus have been into bilateral discussions for the extension of the period of entry into force of the protocol amending Article 13, which relates to the taxing rights of capital gains deriving from the alienation of property.
“Currently the Competent Authorities of both countries have come to a common understanding that a level playing field should be upheld especially among jurisdictions having economic ties with Russia. To this end we are in bilateral negotiations for the finalisation of an amending Protocol that will extend the period until similar provisions are introduced in other bilateral Double Taxation Agreements”, he said.
Panteli pointed out that, the harmonization of Cyprus with EU directives on tax issues, with emphasis on tax transparency and added that the Cyprus Authorities will be participating in the signing ceremony of the `Multilateral Instrument` on Base Erosion and Profit Shifting “BEPS”, which will pave the way for updating holistically all existing Double Tax Agreements .
He also said that Cyprus Authorities in cooperation with the industry work diligently in expanding, updating and improving our DTT network with particular focus on high priority jurisdictions with promising economic prospects and business opportunities.