Russia has ratified the convention signed with Malta for avoidance of double taxation which was signed on 23rd April 2013. The treaty shall enter into force as from 22nd May 2014. You can find some information about the convention below.
The Convention defines a resident, a permanent establishment and allocates taxing rights for, inter alia business profits, dividends, interest, royalties and employment income. In general, the provisions follow the OECD Model with very few amendments.
· Definition of permanent establishment includes the so-called “services PE” and therefore triggers taxation of business income in case of providing of services in the other Contracting State.
· Majority of provisions allocate taxing rights to both countries, stipulating withholding tax rates in case of dividends, interest and royalties between 5 and 10%.
· Double taxation relief is granted by means of a tax credit.
Of note is the fact that the Convention regulates exchange of information between both countries, which is very relevant given that Russia has not concluded any bilateral Agreement on Tax Information Exchange, based on the OECD model (TIEA).
Following the latest trends and developments in the field of tracking tax evasion and tax avoidance, the Convention contains a limitation of benefits clause, however this is of a general character.
