Russia's Finance Ministry Initiates Denunciation Of Tax Agreement With Netherlands

MOSCOW (UrduPoint News / Sputnik - 05th December, 2020) The Russian Finance Ministry said in a press release on Friday it initiated the procedure of scrapping the bilateral agreement with the Netherlands that prevented double taxation as the sides failed to agree on amendments to the treaty.

"The [Russian] Finance Ministry held several rounds of talks with the Dutch Foreign Ministry on amending the agreement on prevention of double taxation to increase the withholding tax to 15 percent on dividends and interest. The [Russian] Foreign Ministry proposed to the Dutch side the same conditions as previously agreed with Cyprus, Luxembourg and Malta, but the talks did not yield success," the press release read.

As for the Netherlands' proposed amendments, the ministry said Russia could not accept them as they provided for loopholes to withdraw taxable funds from the country.

"The tax agreement with the Netherlands, as it is now, provides rather attractive taxation conditions and makes it possible to withdraw revenues from Russia under a 2-3-percent tax, whereas the actual tax in Russia is significantly higher � 15 percent on dividends and 20 percent on interest for legal entities," the ministry said.

More than 1.2 trillion rubles ($16 billion) were withdrawn from Russia to the Netherlands this way in the period from 2017-2019, as stated in the press release.

According to an entry on the Russian government's portal of legal news on Friday, the finance ministry already began works on a draft law terminating the tax agreement with the Netherlands.