Putin suspends tax treaties with Malta and 37 other ‘unfriendly countries’

Russian President Vladimir Putin this afternoon signed a decree suspending Russia’s double taxation agreements with what he called “unfriendly countries”, including Malta.

Russian state news agency RIA reported that Putin has suspended a total of 38 tax treaties with countries that have imposed sanctions against Moscow.

The measure had been proposed by Russia’s finance ministry and foreign ministry in March.

Western countries have imposed successive waves of economic sanctions on Russia in response to its invasion of Ukraine in February last year, which it prefers to call a “special military operation”.

The list includes EU member states, as well as countries such as the United States, South Korea, Japan, Norway, Singapore, Iceland, New Zealand and Australia.

Putin instructed the Russian Foreign Ministry to notify the “unfriendly countries” of the suspension of the provisions of their tax treaties. The Russian government will next submit a Bill to the Duma for approval.

Putin’s decree states it was “Based on the need to take urgent measures in connection with the commission of unfriendly actions by a number of foreign states against the Russian Federation, its citizens and legal entities.”

Malta and Russia signed a Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income in April 2013. It was updated in 2020.

Malta presumably made it onto Putin’s list of foes by virtue of its EU membership and the associated sanctions Malta has had to impose on Russia.

The Maltese government has otherwise been seen as somewhat friendly to Russia when it comes to approving and enforcing those sanctions.

Malta, Cyprus and Greece recently banded together against the EU’s newest round of sanctions against Russia that banned oil tankers from EU ports if they previously engaged in the transhipment of Russian oil in violation of the barrel price cap imposed by the G7.

Malta is also the EU’s laggard when it comes to freezing the assets of sanctioned Russians and Russian companies.

In April, EU Justice Commissioner Didier Reynders, on a visit to Malta, said he was “surprised” that Malta had only frozen €220,000 in Russian-owned assets in its territory. He said he would be seeking an explanation from the Maltese government about why the figure was so low.