RUSSIA RENEGOTIATED ITS TAX TREATY WITH CYPRUS after threatening last summer to cancel the treaty unilaterally. Cyprus still remains the juridiction of choice from which to hold Russian investments. The treaty negotiations were concluded on December 5. The new treaty provides for 0% withholding tax on interest and royalty payments to tax residents of Cyprus. Dividends will be subject to 5% withholding tax, except for investments of the equivalent of US$100,000 or less, where the withholding tax will be 10%. Russia will not tax gain from the sale of shares by Cypriot shareholders in Russian companies. However, gain from the sale of any immovable property situated in Russia may be subject to Russian tax. The new treaty will take effect on January 1 of the year following ratification by the Russian Duma and the Cypriot Council of Ministers. The existing treaty will continue to apply in the meantime.