What will change for businesses as a result of the partial suspension of tax treaties

President Vladimir Putin has signed a decree freezing double tax treaties (DTAs) with 38 states. The specific reason for the sanctions against other jurisdictions is not mentioned in official documents. According to the text of the decree, urgent measures were required “in connection with the commission by a number of foreign states of unfriendly actions against the Russian Federation.” The initiative to limit DTT with Western countries appeared in March 2023 against the backdrop of the inclusion of Russia in the so-called black list by the European Union. The proposal was then made by the Ministry of Finance and the Ministry of Foreign Affairs. By Putin’s decree, the agreements are suspended until “the elimination by foreign states of violations of the legitimate economic and other interests of the Russian Federation committed by them.”

The list of countries subject to the DTT freeze includes almost all EU countries (except Estonia and Latvia), the USA, Great Britain, Switzerland, Singapore, Japan, South Korea, Australia and a number of others. In total, Russia has signed 84 tax agreements, according to the data of the Ministry of Finance. The list of unfriendly jurisdictions maintained by the government is also wider than the list of countries with which it has been decided to freeze the DTT. But not all jurisdictions that have joined the anti-Russian sanctions have a DTT with Moscow – among them there are many offshore zones, such as the Bahamas.