The Protocol also amends the taxation of interest. Interest may be taxed not only in the State of the resident, but also in the State of source. The withholding tax may not exceed 15% of the total amount of interest, provided that the person who has the effective right to the interest (i.e. the beneficial owner of the interest) is established in the other Contracting State. It should be noted that Russian tax legislation provides for the taxation of interest at a rate of 20%. The Russian Ministry of Finance estimates that changes to the agreements with Cyprus, Malta and Luxembourg can bring the Russian budget revenues of about 130 to 150 billion rubles per year (mainly from Cyprus) (about $2 billion). The Government shall endeavour to adapt agreements concluded with foreign partners on the instructions of the President. The revision of treaties with foreign partners is carried out on the instructions of President Vladimir Putin. Addressing the nation in March 2020, the president pointed out the injustice of taxing offshore companies at rates below income tax in Russia. The president ordered the adaptation of the DBA agreements with these countries to ensure that income, such as interest and dividends paid abroad, is taxed at the same rate as in Russia, which is 15%. The Government has approved a draft protocol amending the double taxation convention with Luxembourg.

The protocol increases to 15% the taxes on dividends and interest in favour of Russia for Russian companies operating in Luxembourg. The directive was signed by Prime Minister Mikhail Mishustin. At present, Russia has signed agreements with 79 countries, 78 of which have been imposed. Russia has also signed other treaties that have yet to be ratified. This is the list of signatory States: Algeria, Austria, Armenia, Australia, Azerbaijan, Belarus, Belgium, Botswana, Brazil, Bulgaria, China, Albania, Croatia, Canada, Cuba, Cyprus, Czech Republic, Denmark, Egypt, Finland, Germany, Luxembourg, Greece, Hungary, France, Iceland, India, Iran, Ireland, Israel, Italy, Japan, Kazakhstan, Indonesia, North Korea, South Korea, Kuwait, Lebanon, Lithuania, Macedonia, Malaysia, Mali, Mex iko, Moldova, Mongolia, Montenegro, Morocco, Namibia, Netherlands, New Zealand, Norway, Romania, Philippines, Poland, Slovenia, Portugal, Qatar, Saudi Arabia, Serbia, Singapore, Slovakia, Spain, Switzerland, South Africa, Sri Lanka, Sweden, Syria, Tajikistan, Thailand, Turkey, Turkmenistan, Ukraine, United Kingdom, United States, Uzbekistan, Venezuela, Vietnam. There are two possibilities to benefit from exemptions through double taxation treaties: without tax deduction or tax deduction at a reduced rate, as agreed in the double taxation convention. Preferential taxation applies to institutional investments as well as to listed companies that, during the year, hold at least 15% of the shares and hold at least 15% of the share capital in the company paying this income. The exemptions shall also apply to income received by these undertakings on interest on bank loans, outstanding Eurobond loans as well as on bonds issued by governments, central banks, pension funds and insurance companies of the countries participating in the Agreement.

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