The President of Russia signed the Law No. 372-FZ for the ratification of the income tax treaties with Abkhazia and Malaysia on 2 November 2024.
Earlier, the Russian government approved draft laws for the ratification of pending income tax treaties with Abkhazia and Malaysia on 4 September 2024.
Russia and Abkhazia took a step towards economic cooperation by signing an income tax treaty on 7 May 2024, marking the agreement as a first between the two regions.
The treaty, once ratified, will prevent double taxation and introduce standardised tax rates.
It establishes a 10% withholding tax rate on dividends and royalties, with interest income tax set at 0%, meaning that interest on loans from one contracting state to another won’t be taxed in the source state, benefiting the lending state’s budget.
Additionally, developers are granted an 18-month tax exemption period during construction in another country, ensuring no permanent representative office is formed, with tax obligations resting solely on the country of residence.
Abkhazia is only recognised as an independent state by a handful of nations, including Russia, but the international community primarily recognises it as part of Georgia.
The treaty with Malaysia, signed on 17 May 2024, will come into effect once the ratification instruments are exchanged, applying from 1 January of the year following its entry into force.
Once implemented, it will replace the 1987 tax treaty between Malaysia and the former Soviet Union in relations between Malaysia and Russia.
