The Moscow Federal Arbitration Court has recently issued a decision concerning the beneficial ownership requirement for the enjoyment of the withholding tax exemption on interest under the 1998 Cyprus-Russia income and capital tax treaty.
The case involved Russia-based MDM Bank, which in 2011 and 2012 made interest payments on bonds issued to Cyprus-based MDM Investments Ltd. (MDM Cyprus) and BrokerCreditService (Cyprus) Ltd. (BCS Cyprus). MDM Bank withheld no tax on the interest payments ba…