Page 17 - RusRPTJun21

2.4 Russia to cancel double tax treaty with Netherlands
Russian President Vladimir Putin instructed the government last year to hike taxes on dividend payments moved offshore from 5% to 15%. The goal of doing so is to close a loophole that Russian businesses use to avoid paying income taxes, thus depriving the federal budget of funds.
The Duma passed a law denouncing its bilateral tax treaty with the Netherlands on May 11. The Netherlands was one of the first countries that Russia sought to amend its tax agreement with, but the negotiations did not go as planned.
If Russia’s leadership completes the formal denunciation process by the end of June, Russian companies domiciled in the Netherlands—like Yandex, the X5 Retail Group, and the parent company of Beeline—will have to pay taxes in both countries starting in January 2022.
Doing so would substantially eat into their profits. According to the Ministry of Finance, Russia’s budget lost RUB339bn ($4.6 billon) from companies transferring dividends to the Netherlands in 2019.
After successfully revising tax agreements with popular offshore destinations—Cyprus, Malta, and Luxembourg—MinFin has selected new targets.
The finance ministry says it plans to begin negotiations with Hong Kong, Singapore, and Switzerland to increase the rate at which dividends are taxed. According to MinFin, once the tax treaties with these three locations are amended, roughly 90% of dividends transferred abroad will be taxed at the new 15% rate.
2.5 Russia has oil and gas reserves for 59 and 103 more years respectively – Kozlov
There has been some talk of Russia having passed “peak oil” in the last two years after output that fell from an all time high of 11.2mn barrels a day to 10.4mn in April thanks to the OPEC+ production cuts deal. Experts say that for technical reasons some of the oil fields that have been idled will not be easy to put back into production and might have to be written off.
Not so says Russia’s Natural Resources Minister Alexander Kozlov who claimed last week that Russia has enough extractable oil still in the ground to maintain production for another 59 years and gas reserves that can be exploited for another 100 years.
“Availability of all oil reserves with existing production stands at 59 years given the current production level, and for natural gas it is 103 years,” Kozlov said as cited by RBC on May 11. “But we understand that this is only a general balance. There are fields that are being unlocked, while there are fields that are yet to reach full load. Anyway, we have to improve geological exploration,
17 RUSSIA Country Report June 2021 www.intellinews.com