Cyprus was removed from the black list of offshore areas providing preferential tax treatment and/or not providing disclosure and reporting data on financial operations (the "List").

As a result, the zero profit tax rate in respect of dividends received by Russian companies from Cyprus subsidiaries will apply.

Moreover, transactions between independent Cypriot and Russian companies will no longer be regarded as controlled ones for the purposes of Russian transfer pricing. However, if (i) the Cypriot and Russian counterparties are interdependent persons or (ii) the subject of the transaction is the international trade of commodities, then such transactions will be controlled.

The amendment to the List comes into force on 1 January 2013.

[Order No. 115n of the Ministry of Finance of the Russian Federation "On amending the List of states and territories providing preferential tax treatment and (or) not providing disclosure and reporting data on financial operations (offshore areas), approved by Order No. 108n of the Ministry of Finance of the Russian Federation, dated 13 November 2007", dated 21 August 2012]