Russia will not reinstate suspended tax treaties with Western countries until sanctions on Moscow are lifted, the Finance Ministry said on Saturday.
Russian President Vladimir Putin signed a decree suspending certain provisions of tax treaties with the United States, several EU countries, and other so-called “unfriendly states” earlier this month. On Friday, the British government urged Russia to reverse its decision, stating that the issue was of the “utmost seriousness” and claiming that the “UK-Russia Convention does not permit this unilateral action.”
Double-taxation treaties are agreements between states designed to protect against the risk of the same income being taxed twice in both countries. In total, Moscow has suspended double-taxation agreements with 38 countries, including the UK, Canada, Switzerland, Japan, the Czech Republic, Denmark, Norway, Italy, Finland, France, Germany, Spain and others that have imposed anti-Russia sanctions.
In its statement, directed at the “unfriendly states” and the UK specifically, the Russian ministry cited multiple breaches, including the addition of Russia into the EU Blacklist of non-cooperative jurisdictions for tax purposes, refusals to issue confirmations of permanent residence in a foreign country to their residents for the application of agreements, as well as the suspension of tax information exchange with Russia.
“The partial suspension of tax agreements with unfriendly countries provided for by the Decree will remain in effect until the rights of the Russian side are restored or the agreements are denounced,” the ministry stated, arguing that the “Vienna Convention on the Law of Treaties allows for such a form as the suspension of agreements, including their individual provisions, if the rights of another country have been violated.”
At the same time, the government has been instructed to take measures to reduce the impact of the tax treaties' suspension on the Russian economy.