Treaty between Russia and Cyprus – Russia clarifies "directly invested" for purposes of application of lower withholding tax rates on dividends

On 10 December 2009, the Ministry of Finance of the Russian Federation issued Letter No. ÌÍ-17-3/226 clarifying the application of the reduced withholding tax rate (5%) on dividends under the Russia-Cyprus tax treaty signed 5 December 1998.

According to the treaty, the 5% rate applies to the gross amount of the dividends if the beneficial owner has directly invested in the capital of the company not less than the equivalent of USD 100,000.

The …