Russia to scrap tax agreement with Netherlands as proposed approach fails to combat capital outflows
Russia’s finance ministry proposed new terms similar to those agreed with Cyprus, Malta and Luxembourg. Under the new terms Russia is planning to increase withholding tax on dividends and interest for Russia-focused companies registered in the Netherlands to 15 percent.
“The existing agreement allows significant capital outflows, as the firms registered in the Netherlands are subject to a real tax rate of only 2-3 percent,” the ministry said.Also on rt.com US forces Cypriot banks to crack down on accounts of Russian clients – report
At the same time, the equal tax for companies registered in Russia makes 15 percent on dividends and 20 percent for interest payments, according to the lawmakers.
The tax maneuver allowed by the current legislation reportedly helped many corporations move funds away from Russia. In 2017 alone, those funds reached 457 billion rubles ($6.17 billion) with 1.2 trillion rubles outflows within the previous three years.Also on rt.com Putin calls for 15% tax on offshore funds as part of plan to stabilize Russian economy
In March, President Vladimir Putin suggested a tax be levied on interest and dividend payments leaving Russia to combat offshoring as the country battles low oil prices and the Covid-19 pandemic.
Earlier this year, Russia signed amendments to Double Tax Agreements with Malta, Cyprus and Luxembourg. The new tax treaties are set to come into force on January 1 2021.
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