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Nicosia, 27 June 2008 – Cyprus is without doubt one of the most advantageous locations of residency for Russian and Ukrainian corporations. It gives a excessive degree of banking, auditing, accounting and authorized companies, in addition to its actual estates, which developed Cyprus right into a profitable worldwide enterprise and monetary centre.
Among the most important elements and benefits which safe Cyprus ‘ attractiveness to worldwide companies and investments are the next:
1. 10% company tax fee for enterprise income;
2. No withholding taxes imposed on dividends, curiosity and royalties for non-residents (whether or not an organization or a person);
3. Revenue from dividends is exempt from earnings or company tax;
4. The enticing platform and tax regime that Cyprus supplies for a holding firm (i.e. topic to sure situations full exemption from native taxation in respect of dividends acquired by a holding firm from its native and overseas subsidiaries);
5. The enticing platform and tax regime that Cyprus supplies for worldwide trusts;
6. The community of favorable double taxation treaties that Cyprus maintains with greater than 40 international locations together with Russia and a lot of the ex Soviet Union Republics;
7. Tax benefits out there to non-residents together with non – E.U. residents;
8. Cypriot tax regime permits losses to be carried ahead indefinitely;
9. The geographic location of Cyprus, situated on the crossroads of Europe, Asia and Africa;
One of many talked about above elements is a double taxation treaty between Russia and Cyprus, which supplies to Russians many tax benefits. Settlement was signed between Russia and Cyprus for the avoidance of double taxation with respect to taxes on earnings and capital, again on 17 August 1999. The treaty supplies for both the exemption of earnings within the supply nation or the availability of tax credit score in respect of the overseas tax paid by the nation of tax residence.
Normally, Russian corporations would pay 35 % tax on income, plus a 20 % VAT tax, and a 40 % tax for social safety and worker advantages, in Russia. Nevertheless, when Russian enterprise is structured in a manner {that a} Cyprus firm owns it (which doesn’t require any bodily presence in Russia), all its income shall be legally transferred to Cyprus and is liable for less than a 4.5 % tax on income and a 15 % VAT tax. Russian enterprise escapes the 40 % tax for social companies, accordingly. This tax benefit makes it potential to channel income within the type of dividends at a decreased fee.
As for instance, a Cyprus Holding firm can be utilized for worldwide funding functions. Principally, it’s use of the tax incentives and the treaties for the avoidance of double taxation. An important benefit of a Cyprus Holding Firm is that the dividends acquired by the overseas firm can move completely tax free in Cyprus by the Holding Firm, avoiding on this manner the fee of any tax on dividends. Moreover, funds made to non-Cyprus Resident Shareholders there’s zero (0) withholding tax, so the Shareholder receives the dividends completely tax free.
Cost of curiosity on loans is one other advantageous methodology for Russian companies. Beneath the Cyprus Legislation, Russian Firm partly owned by Cypriot Firm and paying its curiosity on loans to the Cypriot firm, successfully minimizing its taxation. Nevertheless, the curiosity funds aren’t essentially shall be paid to the Cyprus Firm. It’s the simplest methodology which permits Russian firm to keep away from virtually all its tax funds.
Russian companies which structured right into a Cypriot corporations for sustaining its enterprise actions inside territory of Russia, are in a position to switch there income earned in Russia overseas within the type of dividends and curiosity, at appreciable tax financial savings. Firms registered in Cyprus jurisdiction pay decrease taxes than these paid in Russian jurisdictions.
All of the above talked about buildings are based mostly on “Cyprus financial zone” of decreased taxation and completely authorized, moreover its tax benefit could also be enhanced much more when, underneath sure circumstances, is mixed with different jurisdictions in acceptable authorized buildings.
Within the final 30 years, Cyprus Legislation Agency has developed into a good worldwide enterprise and monetary centre because of the very favorable tax regime that the island gives. The admission of Cyprus to the European Union as full member in Might 2004, established Cyprus as a prestigious, steady and enticing jurisdiction.
Although the offshore firm standing was abolished as from January 1, 2003 the favorable tax regime for the worldwide investor has been maintained. As well as, the liberalization of investments coming from non-EU international locations and the abolition of most and minimal participation percentages in investments in all of the sectors of the economic system in October 2004 (except it’s in any other case supplied by the Legislation), has reworked Cyprus into a serious vacation spot for the situation of worldwide, holding corporations and worldwide investments.
Contact:
Olga Kosareva, NCI Legislation Group
Olga@NCILawgroup.com
T: +357-22-680670
Writer: Ioannis John Neocleous
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Source by Ioannis John Neocleous
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