In December of last year the Ministry of Finance issued a decree with a list of 41 countries and territories which “provide a privileged tax regime and/or do not require reporting or disclosure of information of financial transactions.”
This list may be described as a “blacklist” since companies registered in these territories may not receive tax exemptions for dividends received fore shareholding investments in subsidiary companies (amendments to Tax Code from January 1, 2008, establish zero rate for this tax).
Cyprus was included in this listing. It was added on the grounds that “the Russian tax authorities do not receive responses to requests regarding transactions between Russian and Cyprus contractors,” according to an explanation by deputy minister of finances Sergei Shatalov and as quoted by the Kommersant newspaper.
This situation troubled Cyprus authorities who are concerned about the image of their country. The Ministries of Finance for the two countries agreed to hold two rounds of talks on the issue – in the nearest future and in September. According to Shatalov, Cyprus is ready to guarantee that it will provide full and timely information in order to be removed from the list of offshore havens. It is even possible, said the deputy minister, that the parties will also introduce changes to the double-taxation treaty.
Cyprus’ Minister of Finance Charilaos G. Stavrakis hopes that the country will be removed from the list by October 2012. However, even if the scheduled talks are successful, it will not happen for at least another one to two years due to the fact that it is still included in the list of problematic jurisdictions compiled by the Organization of Economic Cooperation and Development, and difficulties in obtaining information from Cyprus are only half of the problem.