Singapore VS Cyprus for Russian companies

Ministry of Finance of the Russian Federation has decided to terminate an avoidance double taxation agreement signed between Cyprus and Russia.

This decision performed by Russian authorities came as a surprise. From January 1, 2021, payments of interest and dividends from Russia to Cyprus are subject to withholding tax at a rate of 15% (Based on

The Ministry of Finance of the Russian Federation proposed to colleagues in Cyprus to raise rates to 15% on both dividends and interest, but, unfortunately, the negotiations were failed.
The department expects that the restructuring of holding structures through Cyprus will become unprofitable and the business will be returned back to Russia. “We will improve the legislation in the part of the administrative districts in order to make these jurisdictions more attractive for the transfer of holding structures to Russia, respectively,” the Ministry of Finance promised.
Excepting Cyprus, the Ministry of Finance notified of the further plans to amend the tax agreements between Luxembourg and Malta.

Benefits for insurance companies and pension funds, as well as listed companies, have been preserved. In addition, tax exemptions are provided for interest payments on corporate bonds, government bonds and Eurobonds. A zero royalty tax will also remain.

The main issue is being able to distribute dividends from Russian subsidiaries to a holding company free of taxes. When paying such payments in favor of a Cypriot holding, withholding tax will be pointed at 15%.
With regard to Singapore, dividends are not taxable only if the conditions are met - first the proof of tax residency is presented, and then the consolidated statements are filed and audited in Singapore.
As for the agreement with the Russian Federation, the withholding tax on royalties is 5%, on interest - 0%, but on dividends from 0% to 5%. The latter applies if the beneficial owner is a company that directly owns at least 15% of the company paying the dividends.

It must be said that Cyprus is a low tax jurisdiction with a corporate tax of 12.5%. The resident company must pay only local taxes. The VAT rate is 19%, which can be avoided if the goods and services were not provided in Cyprus. In Singapore, the corporate tax is 17% of income over 200,000 SGD, and VAT (GST) is not required for registration if few circumstances are met.

Company formation in Cyprus can be considered as an opportunity to obtain economic citizenship by investing from 500,000 EUR. Unfortunately, there is no such practice in Singapore.

In Cyprus, an audit of financial statements is required, in Singapore, it is mandatory only if few parameters are met, especially important if the company's assets or turnover exceed 10,000,000 SGD.

Taxes in Cyprus can be optimized and the income tax rate can be reduced by 2% if the Cypriot offshore company makes the profits from the ownership of intellectual property (IP).

Write to us and we will recommend a suitable jurisdiction!