| Nicosia, 27 June 2008 - Cyprus is one of the most | | | | rate. |
| advantageous places of residency for Russian and | | | | As for example, a Cyprus Holding company can be |
| Ukrainian companies. It offers a high level of banking, | | | | used for international investment purposes. Basically, it |
| auditing, accounting and legal services, as well as its | | | | is use of the tax incentives and the treaties for the |
| real estates, which developed Cyprus into a | | | | avoidance of double taxation. The most important |
| successful international business and financial centre. | | | | advantage of a Cyprus Holding Company is that the |
| Some of the main factors and advantages which | | | | dividends received by the foreign company can flow |
| secure Cyprus ' attractiveness to international | | | | totally tax free in Cyprus through the Holding |
| businesses and investments are the following: | | | | Company, avoiding in this way the payment of any tax |
| 1. 10% corporate tax rate for business profits; | | | | on dividends. Furthermore, payments made to |
| 2. No withholding taxes imposed on dividends, interest | | | | non-Cyprus Resident Shareholders there is zero (0) |
| and royalties for non-residents (whether a company or | | | | withholding tax, so the Shareholder receives the |
| an individual); | | | | dividends absolutely tax free. |
| 3. Income from dividends is exempt from income or | | | | Payment of interest on loans is another advantageous |
| corporation tax; | | | | method for Russian businesses. Under the Cyprus |
| 4. The attractive platform and tax regime that Cyprus | | | | Law, Russian Company partly owned by Cypriot |
| provides for a holding company (i.e. subject to certain | | | | Company and paying its interest on loans to the |
| conditions full exemption from local taxation in respect | | | | Cypriot company, effectively minimizing its taxation. |
| of dividends received by a holding company from its | | | | However, the interest payments are not necessarily |
| local and foreign subsidiaries); | | | | will be paid to the Cyprus Company. It is the most |
| 5. The attractive platform and tax regime that Cyprus | | | | effective method which allows Russian company to |
| provides for international trusts; | | | | avoid almost all its tax payments. |
| 6. The network of favorable double taxation treaties | | | | Russian businesses which structured into a Cypriot |
| that Cyprus maintains with more than 40 countries | | | | companies for maintaining its business activities within |
| including Russia and most of the ex Soviet Union | | | | territory of Russia, are able to transfer there revenue |
| Republics; | | | | earned in Russia abroad in the form of dividends and |
| 7. Tax advantages available to non-residents including | | | | interest, at considerable tax savings. Companies |
| non - E.U. residents; | | | | registered in Cyprus jurisdiction pay lower taxes than |
| 8. Cypriot tax regime permits losses to be carried | | | | those paid in Russian jurisdictions. |
| forward indefinitely; | | | | All the above mentioned structures are based on |
| 9. The geographic location of Cyprus, located at the | | | | "Cyprus economic zone" of reduced taxation and |
| crossroads of Europe, Asia and Africa; | | | | perfectly legal, furthermore its tax advantage may be |
| One of the mentioned above factors is a double | | | | enhanced even more when, under certain |
| taxation treaty between Russia and Cyprus, which | | | | circumstances, is combined with other jurisdictions in |
| provides to Russians many tax advantages. | | | | appropriate legal structures. |
| Agreement was signed between Russia and Cyprus | | | | In the last 30 years, Cyprus Law Firm has developed |
| for the avoidance of double taxation with respect to | | | | into a reputable international business and financial |
| taxes on income and capital, back on 17 August 1999. | | | | centre due to the very favorable tax regime that the |
| The treaty provides for either the exemption of | | | | island offers. The admission of Cyprus to the |
| income in the source country or the provision of tax | | | | European Union as full member in May 2004, |
| credit in respect of the foreign tax paid by the country | | | | established Cyprus as a prestigious, stable and |
| of tax residence. | | | | attractive jurisdiction. |
| Usually, Russian companies would pay 35 percent tax | | | | Though the offshore company status was abolished |
| on profits, plus a 20 percent VAT tax, and a 40 | | | | as from January 1, 2003 the favorable tax regime for |
| percent tax for social security and employee benefits, | | | | the international investor has been maintained. In |
| in Russia. However, when Russian business is | | | | addition, the liberalization of investments coming from |
| structured in a way that a Cyprus company owns it | | | | non-EU countries and the abolition of maximum and |
| (which does not require any physical presence in | | | | minimum participation percentages in investments in all |
| Russia), all its profits will be legally transferred to | | | | the sectors of the economy in October 2004 (unless it |
| Cyprus and is liable for only a 4.5 percent tax on | | | | is otherwise provided by the Law), has transformed |
| profits and a 15 percent VAT tax. Russian business | | | | Cyprus into a major destination for the location of |
| escapes the 40 percent tax for social services, | | | | international, holding companies and worldwide |
| accordingly. This tax advantage makes it possible to | | | | investments. |
| channel profits in the form of dividends at a reduced | | | | |