I faced same problem with latest xenial build in lxd.

lxc init 7e745cf3a3a7 xenial
lxc start xenial
lxc exec xenial -- /bin/bash

root@xenial# echo 'Europe/Moscow' > /etc/timezone
root@xenial# dpkg-reconfigure -f noninteractive tzdata
root@xenial# cat /etc/timezone 
Etc/UTC

And nothing will be happened. Timezone is not changed.

I suppose that it is a tzdata package bug in 16.04.

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https://bugs.launchpad.net/bugs/1556527

Title:
  tzdate upgrade fails wih invalid format error during Xenial upgrade

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