Recently, the Ministry of Finance made public Letter No. 03-08-05/3935 clarifying the tax treatment of dividends paid by a Russian mutual investment fund to a Cypriot shareholder based on the Cyprus - Russia Income and Capital Tax Treaty (1998) (as amended through 2010) (the Treaty).
According to the Treaty, dividends paid to a beneficial owner resident of Cyprus may be taxed in Cyprus, but the tax cannot exceed 5%, subject to the condition that the Cypriot resident, being the beneficial…