North Cyprus Property Market Opens to Russians

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span                            collective investment funds. The
class="cap">After       corporation tax rate for offshore
months of negotiation, the      companies of 4.25%, and the
Russian parliament (Duma) has         increasing number of double tax
voted to approve a double             agreements with other countries,
taxation treaty with Cyprus,          are two strong reasons for
making it easier for Russian          establishing a collective
citizens to buy property in the       investment fund in Cyprus.
country.                              Current legislation creates no
The new treaty replaces the one       problems for close-ended funds. A
signed between the two countries      study has been commissioned by
in 1998. In the past decade,          the government for drafting the
Cyprus has signed several double      appropriate legislation for
taxation treaties in an effort to     open-ended funds.

make the country attractive to

Under the double tax treaty
off-shore enterprises and             with Cyprus, investors can enjoy
property investors. Cyprus is         a 5% withholding tax rate on
clearly benefiting from the           dividends distributed by a
present arrangement which allows      Russian subsidiary, rather than
it to become a base through which     the regular 15% rate. Therefore,
foreign companies can do business     using Cypriot holding companies
in Russia. However, Russian           is one of the most typical
officials have expressed their        vehicles to structure inbound
intention to amend the treaty.        investments in Russia.

This is the third round of talks

Despite having numerous
between the two parties and           treaties, the signature from the
negotiations are expected to          Russian parliament is perhaps
continue.

viewed as the most important one

Cyprus is putting great on the list. Scores of Western
efforts into attracting offshore businesses have established a

presence in Cyprus to trade with      holding company (i.e. subject to
Russian companies and Russians        certain conditions full exemption
are now viewed alongside the          from local taxation in respect of
British as the most important         dividends received by a holding
international buyer group on the      company from its local and
island.

foreign subsidiaries); The

Cyprus is one of the most          attractive platform and tax
advantageous places of residency      regime that Cyprus provides for
for Russian and Ukrainian             international trusts; The network
companies. It offers a high level     of favorable double taxation
of banking, auditing, accounting      treaties that Cyprus maintains
and legal services, as well as        with more than 40 countries
its real estates, which developed     including Russia and most of the
Cyprus into a successful              ex Soviet Union Republics; Tax
international business and            advantages available to
financial centre.

non-residents including non -

Some of the main factors and       E.U. residents; Cypriot tax
advantages which secure Cyprus '      regime permits losses to be
attractiveness to international       carried forward indefinitely; The
businesses and investments are        geographic location of Cyprus,
the following: 10% corporate tax      located at the crossroads of
rate for business profits; No         Europe, Asia and Africa.

withholding taxes imposed on

Ukraine balks from treaty

dividends, interest and royalties

Although the Russian
for non-residents (whether a          government ratified the treaty,
company or an individual); Income     the Ukrainian parliament has
from dividends is exempt from         rejected a similar agreement
income or corporation tax; The        between itself and Cyprus. The
attractive platform and tax           Ukrainian government believes
regime that Cyprus provides for a     that the old treaty between the

Soviet Union, of which the            goes against the nature of the
Ukraine was a member, and Cyprus      original
in the 1980s, was too generous        agreement.

and allowed private individuals end>About the
and companies to avoid paying the Authorappropriate level of taxes in id="authorbio"
their home country.

class="membersnoticewhite">Linda

It has since rejected the new      Cartwright is an expert on the
treaty with Cyprus and is likely      property market in North Cyprus,
to take a further six months for      currently writing for it to be altered and put before       href="http://www.meridieshomes.co
the country’s government again.       m/">Meridies
The Cypriot parliament is also        Homes