Cyprus ends Double Taxation between Russia and UAE
Bilateral ties with Cyprus were given a boost this month when both Russian and the UAE completed important negotiations in Cyprus recently. On Thursday, 7 October 2010, Russian President Dmitry Medvedev signed 15 agreements, among which was an accord abolishing double taxation between Cyprus and Russia. This agreement should further enhance economic cooperation between the two countries and increase investment in each.
Double taxation is when the same income is taxed twice and can happen when different sovereign states impose separate taxes. The problem is caused by governments following different principles and set different rates of taxation. The end result of this is that companies can end up paying taxes in both countries which may then lead to the relocation of economic activity to avoid the high taxes.
After the collapse of the Soviet Union in the early 1990’s there was a huge exodus of capital but Russia is now receiving an inflow of investments from Cyprus. Cyprus has the lowest corporate tax rate in the EU at 10 per cent.
Cyprus has signed tax treaties with 50 countries and is a viable place in which to invest. Most recently, the United Arab Emirates and Cyprus completed negotiations on their Double Taxation Agreement on Oct 25. The agreement is intened to help both countries capitalize on their mutual investments and enhance the commercial relations between the both countries. The talks were held in Nicosia from Oct 19 to Oct 21, 2010. The delegations were led by the UAE’s Ambassador to Lebanon and Cyprus, Rahma Al Za’abi, and Cyprus' Finance Minister, Christos Patsalides.
Cyprus relies heavily on revenues from tourism and this past August arrivals from Russia increased by 80% over the same month last year. Perhaps the new agreement with the UAE will also boost tourism from that part of the world.