The economic pressure on the Russian government has to lead to the final decision to scrap the Double Tax Avoidance Agreement (DTAA) with Cyprus. In the press, sides are blaming each other for it to happen. As a result of the denunciation of DTAA, the Russian businesses that have transferred the ownership of their Russian companies will have to suffer 15% of withholding tax when paying dividends to the Cyprus holding companies.
This would obviously have a negative impact on the service industry in Cyprus. Russian businesses are making a substantial contribution to the Cyprus economy by engaging Cyprus lawyers, accountants, and service providers to service their Cyprus branches of Russian businesses. Additionally, Russian businesses were establishing offices and bringing staff in Cyprus to establish a minimum presence for tax compliance purposes.
It is obvious that Russian businesses will start looking to find the appropriate substitute for Cyprus. One of the possible solutions is the use of a Singapore company. DTAA between Russia and Singapore still contains the provision of taxation of dividends at 5%/10%.