Worldwide Corporate Tax Guide 2021
1503
Russian Federation ey.com/GlobalTaxGuides
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1504 R U S S I A N F E D E R AT I O N Tax Technology and Transformation Andrei Ignatov
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Alexei Malenkin
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Indirect Tax
Vadim Ilyin
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Law Georgy Kovalenko
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St. Petersburg EY Malaya Morskaya Street, 23 St. Petersburg 190000 Russian Federation
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Principal Tax Contact Dmitri Babiner
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An average exchange rate of RUB74 = USD1 is used to convert Russian rubles into US dollars in this chapter.
A. At a glance Corporate Profits Tax Rate (%) Capital Gains Tax Rate (%) Branch Tax Rate (%) Withholding Tax (%) Dividends Interest on Certain Types of State and Municipal Securities Other Interest Royalties from Patents, Know-how, etc. Income from the Operation, Maintenance or Rental of Vessels or Airplanes in International Traffic Payments of Other Russian-Source Income to Foreign Companies Branch Remittance Tax Net Operating Losses (Years) Carryback Carryforward
0/3/20 (a)(b) 0/20 (a)(c) 20 (a) 0/13/15 (d) 15 (e) 20 (e) 20 (e) 10 (e) 20 (e) 0 0 Unlimited (f)
R U S S I A N F E D E R AT I O N 1505 (a) The basic corporate profits tax rate consists of a 3% rate payable to the federal government and a 17% rate payable to the regional governments. Regional governments were previously entitled to decrease the tax rate payable in their respective regions. The reduced rates could have been applicable until 1 January 2023. Reduced corporate profits tax rates could be available under certain specific regimes. See Section B for further details. (b) The 0% rate applies to profits of companies performing educational and medical activities. The 3% rate applies to profits of information technology companies that employ not less than seven persons and that derive not less than 90% of their income from providing information technology services. Also, see Section B. (c) The 0% rate applies to capital gains realized by Russian tax residents on the disposal of certain shares or participation interests held for at least five years. Also, see Section B. (d) The 13% rate applies to dividends received by Russian tax residents (companies or individuals). The 15% rate applies if the recipient of the dividends is a foreign legal entity. The 0% rate applies to dividends received by Russian tax residents if the recipient has held at least 50% of the payer’s capital for more than 365 days, subject to certain limitations. (e) This tax applies if the payments are made to foreign legal entities that are not Russian tax residents and if they are not attributable to a permanent establishment in the Russian Federation. The tax is considered final. (f) Losses carried forward must have been incurred in tax periods not earlier than 1 January 2007. No time limit is set for the loss carryforward, but the annual carryforward is limited to 50% of the tax base (before carryforward). This limitation applies until 1 January 2022.
B. Taxes on corporate income and gains Corporate profits tax. Russian enterprises, foreign legal entities that are Russian tax residents and foreign legal entities operating through a permanent establishment are subject to tax. The definition of “permanent establishment” is similar to the definition of the same term in the model treaty of the Organisation for Economic Co-operation and Development (OECD). Russian legal entities and foreign legal entities that are Russian tax residents are subject to tax on their worldwide income. Russian legal entities are those registered in the Russian Federation. Foreign legal entities are deemed to be Russian tax residents if their place of management is the Russian Federation, except as otherwise provided by a double tax treaty.
Foreign investment is permitted in various forms, including investment through 100% subsidiaries, share participation in joint stock companies and other types of Russian legal entities, branches and representative offices. Tax rates. For both Russian legal entities and foreign legal entities, the basic corporate profits tax rate consists of a 3% rate payable to the federal government and a 17% rate payable to regional governments. Until 3 September 2018, regional governments had the power to set lower rates for their respective regions. These rates could have been applicable until 1 January 2023. Starting from 3 September 2018, regional governments may set lower rates only for residents of special social and economic zones or for parties to special investment contracts and regional investment projects. Residents of special social and economic zones may be subject to a 0% or 2% profits tax rate payable to the federal government, while parties to special investment contracts and regional investment projects may be subject to a 0% profits tax rate payable to the federal government.
1506 R U S S I A N F E D E R AT I O N
A 0% tax rate applies to profits of Russian companies performing educational, cultural and medical activities if they satisfy certain criteria. These criteria include the holding of a license for carrying out the corresponding activities and the receipt of not less than 90% of taxable income from educational, medical or research and development (R&D) activities. Capital gains. Capital gains are generally included in taxable in-
come and taxed at the regular rates, except for capital gains realized by Russian tax residents on the disposal of certain shares or participation interests in Russian or foreign tax residents (except for residents of blacklisted offshore jurisdictions) continually held for at least five years. The disposal of shares and participation interests is subject to a 0% rate if shares and interests satisfy any of the following conditions: • They are participation interests in Russian or foreign entities in which the value of immovable property located in the Russian Federation does not exceed 50% of their total assets. • They are marketable or non-marketable shares of the Russian or foreign entities in which the value of immovable property located in the Russian Federation does not exceed 50% of their total assets. • At the date of realization, they are marketable shares of the Russian entities, which simultaneously are recognized as the shares in high-tech (innovation) companies (this condition has been suspended until 1 January 2023). Capital gains realized on shares by an international holding company are subject to a 0% rate if all of the following conditions are simultaneously met with respect to such shares (participation interests): • The shares (participation interests) in the Russian or foreign organization as of the date of disposal have been continuously possessed for not less than 365 calendar days and constitute a holding (participation interest) of not less than 15%. • The shares (participation interests) are in a tax resident entity for which the value of immovable property located in the Russian Federation does not exceed 50% of its total assets. • The shares (participation interests) in a Russian or foreign organization were not contributed (transferred) to the charter capital of an international holding company within 365 calendar days before or after the date of the registration of that company as an international company or acquired by such a company as a result of reorganization within 365 calendar days before or after the date of the registration of that company as an international company. Capital gains derived by a foreign company without a tax presence in the Russian Federation from the sale of shares in a company in which more than 50% of the value of its assets directly or indirectly consists of immovable property located in the Russian Federation are subject to tax in the Russian Federation at the regular 20% rate. Capital gains on the disposal of securities are subject to profits tax at the standard tax rate. Specific rules regulate the computation of capital gains on quoted and unquoted securities. Such specific rules apply only to transactions considered to be controlled
R U S S I A N F E D E R AT I O N 1507
transactions under transfer-pricing rules; otherwise, the actual transaction price applies. Specific rules exist for the recognition of tax losses from sales of quoted and unquoted securities. Losses on the disposal of quoted securities may be deducted from the general profits tax base. Tax bases relating to unquoted securities and unquoted derivatives are merged into a single tax base. Losses on sales of fixed assets and other property are generally deductible, subject to certain restrictions. Administration. The tax year is the calendar year (from 1 January to 31 December of the relevant year). The law does not allow for the tax year to be changed. Taxpayers, with certain exceptions, are required to make advance tax payments monthly. Each payment must equal one-third of the total advance payments for the preceding quarter. Alternatively, taxpayers may choose to pay tax by the 28th day of each month based on profits actually earned in the preceding month. Foreign legal entities acting through a permanent establishment in the Russian Federation, as well as some other entities, must make quarterly tax payments. The final return for the year and the tax liability are based on actual results. Taxpayers’ final returns are due on 28 March following the end of the tax year. Significant penalties are imposed for failure to file returns by this deadline, which cannot be extended.
Taxpayers must register with the tax authorities at the following locations: • The location where they were organized • The location of any economically autonomous subdivisions • The location of any immovable property or means of transport owned by them Dividends. Dividends received by Russian tax resident entities or by individuals who are residents of the Russian Federation are subject to tax at a rate of 13%. Dividends received by a foreign entity that is not a Russian tax resident from a Russian tax resident are taxable at a rate of 15%. Tax withheld from dividends received by a Russian tax resident from another Russian tax resident may be offset against the tax that would normally be withheld from dividends paid to Russian tax residents by the recipient.
Dividends received by Russian legal entities on strategic shareholdings are generally exempt from tax. Under this regime, dividends are considered to be received from strategic shareholdings if the recipient has held at least 50% of the payer’s capital for more than 365 days as of the date of the decision to pay the dividends. Dividends received by a multinational (international holding) company that is resident in special administrative districts (international holding company) are subject to a rate of 0% if, at the date of the decision to pay the dividends, the recipient has owned at least 15% of the payer’s capital for more than 365 consecutive days. Dividends on shareholdings in a foreign company are also subject to the requirement that the foreign company not be in the blacklisted offshore jurisdictions.
1508 R U S S I A N F E D E R AT I O N
Subject to certain conditions, a reduced 5% withholding tax rate is available until 1 January 2029 for dividends paid by a public international holding company in favor of its foreign shareholders. Foreign tax relief. Foreign withholding taxes may be credited
against Russian tax imposed on the same income, up to the amount of Russian tax on the income.
C. Determination of trading income General. Taxable profit is determined by computing the profit or
loss from business activities and non-selling operations, such as leasing income and capital gains. Income received in foreign currency is translated into rubles according to the relevant daily exchange rate determined by the Central Bank of the Russian Federation. The Tax Code provides an open list of expenses that are deductible for tax purposes. The rules discussed below apply to the recognition of interest as income or an expense.
For transactions recognized as controlled under the transfer-pricing rules, these rules should be taken into account in determining the interest recognized for profits tax purposes. The lender has the right to recognize the actual interest on the debt as income if the rate exceeds the lowest value of the range of threshold values that is established by the Tax Code (see table below), while the borrower has the right to recognize the actual interest on the debt obligation as an expense if the rate is lower than the highest value of this same range of threshold values. For the period from 1 January 2020 to 31 December 2021, a provisional range of threshold values is established. The following table contains the ranges of threshold values. Currency of indebtedness
Lower threshold
Upper threshold
Provisional thresholds
Rubles (RUB)
75% of the key rate of the CBR (a)
125% of the key rate of the CBR
From 75% to 180% of the key rate of the CBR (from 0% to 180% in certain cases)
Euro (EUR)
EURIBOR (b) + 4 percentage points
EURIBOR + 7 percentage points
From 0% to EURIBOR + 7 percentage points
Chinese yuan SHIBOR (CNY) (c) + 4 percentage points
SHIBOR + 7 percentage points
From 0% to SHIBOR + 7 percentage points
R U S S I A N F E D E R AT I O N 1509 Currency of indebtedness
Lower threshold
Upper threshold
Provisional thresholds
Pounds sterling (GBP)
LIBOR (d) in GBP + 4 percentage points
LIBOR in GBP + 7 percentage points
From 0% to LIBOR in GBP + 7 percentage points
Swiss francs (CHF)
LIBOR in CHF + 2 percentage points
LIBOR in CHF + 5 percentage points
From 0% to LIBOR in CHF + 5 percentage points
Japanese yen (JPY)
LIBOR in JPY + 2 percentage points
LIBOR JPY + 5 percentage points
From 0% to LIBOR in JPY + 5 percentage points
Other (including US dollar [USD])
LIBOR in USD + 4 percentage points
LIBOR in USD + 7 percentage points
From 0% to LIBOR in USD + 7 percentage points
(a) (b) (c) (d)
Central Bank of the Russian Federation Euro Interbank Offered Rate Shanghai Interbank Offered Rate London Interbank Offered Rate
Thin-capitalization rules limit the deductibility of interest if the debt-to-equity ratio exceeds 3:1. They apply to certain types of intragroup loans as well as to external loans secured by interdependent parties. For details on tax depreciation, see Tax depreciation. Certain costs related to research and development (R&D) are deductible in the amount of actual documented costs multiplied by a factor of 1.5. Foreign legal entities doing business in the Russian Federation through a permanent establishment are taxed on actual profits. The taxable profit equals income received as a result of carrying out activities in the territory of the Russian Federation through a permanent establishment, minus the amount of expenses incurred by the permanent establishment. General and administration expenses allocated by a foreign legal entity’s head office to a Russian permanent establishment are deductible only if this is specifically allowed by an applicable double tax treaty. If a permanent establishment of a foreign entity provides services of a preparatory or auxiliary nature to third parties for no charge, the taxable profit derived from such activities is deemed to be 20% of the amount of the expenses incurred by the permanent establishment in such activities. Tax depreciation. Depreciable assets are assets with a useful life of more than 12 months and an initial cost of more than RUB40,000 (approximately USD541) for assets put in use before 1 January
1510 R U S S I A N F E D E R AT I O N
2016 and RUB100,000 (approximately USD1,351) for assets put into use on or after 1 January 2016. All depreciable assets must be allocated to their relevant depreciation group and depreciated over their useful lives. The taxpayer determines the relevant depreciation group by using the “Classifier of Fixed Assets” issued by the Russian government. The “Classifier of Fixed Assets” provides for 10 depreciation groups and useful lives of 1 to more than 30 years for the depreciable assets in the groups. Based on the useful lives, the taxpayer calculates the depreciation deductible for profits tax purposes. Depreciation may be calculated using either the reducing-balance or straightline methods. The straight-line method is required for assets with a designated useful life of over 20 years. Otherwise, the reducing-balance method may be applied. Under this method, depreciation must be determined for each depreciation group as a whole. Depreciation must be calculated based on the total balance of each depreciation group. This balance equals the total book value brought forward for all depreciable assets included in the group to which the reducing-balance method applies. The depreciation method can be changed once in a five-year period. Enterprises may deduct 10% (30% with respect to fixed assets with a designated useful life of over 3 years and up to 20 years) of the initial book value of newly purchased fixed assets and capital investments in existing fixed assets as current-year expenses (a capital investment allowance). If fixed assets are transferred between interdependent parties within five years after the date of the purchase, the deducted capital investment allowance is recaptured. Relief for losses. Enterprises may carry forward unrelieved
operating tax losses for an unlimited number of years to offset up to 50% of the annual tax base (before loss carryforward). This 50% limitation applies until 1 January 2022. Losses carried forward must have been incurred in tax periods not earlier than 1 January 2007. Groups of enterprises. Related enterprises may not offset profits
and losses among members of a group unless they are members of a consolidated group of taxpayers (CGT). It is not currently possible to register a new CGT.
D. Other significant taxes The following table summarizes other significant taxes. Nature of tax
Value-added tax, on goods sold and services rendered, excluding exports and charter capital contributions Standard rate Certain food products and children’s goods Many exports of goods and certain services
Rate (%)
20 10 0
R U S S I A N F E D E R AT I O N 1511 Nature of tax
Assets tax; applicable to immovable property only; rate varies by type of tax base Net book value; maximum rate Cadastral value; maximum rate Tariffs Export, rate varies by type of good Import Contributions for social insurance in case of temporary incapacity for work and maternity; on annual payments to employee On payments up to RUB966,000 (approximately USD13,054) On payments in excess of RUB966,000 Contributions for pension insurance; on annual payments to employee On payments up to RUB1,465,000 (approximately USD19,797) On payments in excess of RUB1,465,000 Contributions for medical insurance; on annual payments to employee Supplementary contributions for workplace accidents; rate varies by industry Income tax withholding by employers Residents; starting 1 January 2021, a progressive personal income tax rate of 15% is introduced. Specifically, income of a Russian tax resident up to RUB5 million [approximately USD67,568] is taxed at a rate of 13%. If the annual income exceeds RUB5 million, the exceeding part is taxed at 15% Nonresidents Mineral extraction tax; imposed on the value or volume of extracted commercial minerals Transport tax
Rate (%)
2.2 2 Various Various
2.9 0
22 10 5.1 0.2 to 8.5
13/15 30 Various Various
E. Miscellaneous matters Foreign-exchange controls. Most foreign-exchange restrictions
were abolished in 2006. Russian enterprises’ foreign-currency receipts must be deposited in bank accounts in the Russian Federation.
General anti-avoidance rule. Under the general anti-avoidance rule, a taxpayer is not permitted to reduce the tax base and/or the amount of tax payable as a result of misrepresenting information on economic events (or a group of such events) and objects of taxation that are required to be disclosed in a taxpayer’s tax and/ or accounting records or tax statements.
A taxpayer has the right to reduce the tax base and/or the amount of tax payable if both of the following conditions are simultaneously met: • It is not the principal objective of the transaction (operation) to cause an amount of tax not to be paid (or not to be paid in full) and/or to be credited (or refunded).
1512 R U S S I A N F E D E R AT I O N
• The obligation arising from the transaction (operation) is fulfilled by a person who is a party to the contract concluded with the taxpayer and/or a person to whom the obligation to perform the transaction (operation) was transferred by contract or law. The tax authorities pay particular attention to cross-border transactions. They analyze the status of the beneficial owner of income for the purposes of assessing the applicability of the provisions of double tax treaties. Contracts for the provision of intercompany services within multinational enterprises are closely scrutinized by the tax authorities. This involves checking that services were actually provided and that they are properly documented and economically justified. Transactions associated with intragroup financing are also subjected to rigorous scrutiny. In some cases, the tax authorities reclassify loans from foreign entities as investments, which leads to adverse tax consequences (non-deductibility of interest expenses and reclassification of interest payments to other types of income). The Russian general anti-avoidance rule is also designed to combat “one-day companies” (mala fide counterparties), which are used by mala fide taxpayers as a means of securing valueadded tax refunds and claiming expenses for tax deduction. Transfer pricing. The transfer-pricing rules, which are largely based on the arm’s-length principle stipulated by the transfer-pricing guidelines of the OECD, apply to controlled transactions. Controlled transactions include, among others, the following: • Cross-border transactions with related parties if the total annual turnover from the transactions between these parties exceeds RUB60 million (approximately USD810,811) • Cross-border transactions involving certain types of commodities (for example, crude oil, oil products, fertilizers and metals) if the total annual turnover from the transactions exceeds RUB60 million (approximately USD810,811) • Transactions with independent companies located in certain jurisdictions providing beneficial tax regimes if the annual total turnover from the transactions between these parties exceeds RUB60 million (approximately USD810,811) • Domestic transactions with related parties if the annual total turnover from the transactions between these parties exceeds RUB1 billion (approximately USD13,513,514) and provided certain requirements are met
The providing of loans and guarantees is excluded from transferpricing control if the agreement entered into force before 1 January 2012 and if no material changes have occurred with respect to the terms and conditions. The Tax Code contains a specific definition of related parties and transfer-pricing documentation requirements. Interest penalties and fines of 40% of underpaid tax apply if the price in the controlled transaction is proved to be outside a range of market prices. No fines apply if the taxpayer submits transfer-pricing documentation to the tax authorities within 30 days after the date on which the tax authorities request such documentation.
R U S S I A N F E D E R AT I O N 1513
Corresponding transfer-pricing adjustments are available for a Russian party to a transaction if the other party paid additional tax to the tax authorities based on the results of a transfer-pricing audit. Major Russian taxpayers can enter into advance pricing agreements. A Russian party to a controlled transaction also has the right to make a corresponding adjustment of the transfer price if the other party voluntarily made an adjustment. To guarantee the automatic exchange of financial account information between the Russian Federation and its foreign counterparts, effective from 1 January 2018, requirements for Country-by-Country Reporting (CbCR) apply to multinational groups of companies and requirements apply to financial market companies for the supply information on their clients in a Common Reporting Standard (CRS) format. Tax periods for which these two kinds of exchanges will be possible can be determined from the lists of “relationships” between the Russian Federation and its foreign partners published by the OECD on its website. Controlled foreign companies. Controlled foreign company (CFC)
rules apply to situations in which a Russian tax resident (company or individual) controls a company resident in a foreign jurisdiction and that foreign company has not distributed its profits.
Definition of CFC. CFCs are companies that are tax resident in foreign jurisdictions and that are controlled by Russian tax-resident individuals and companies. The definition of CFCs also covers structures that are not legal entities and that are controlled by Russian tax residents. Under the CFC rules, the tax base of Russian taxpayers includes certain profits of CFCs if the CFCs do not distribute their profits to Russian tax resident shareholders. Definition of control. Control is defined as the following: • The ability of a Russian tax resident entity or individual to exert a decisive influence on decisions affecting a controlled company’s distribution of profit • The ability to influence the entity or individual that manages such structure’s assets with respect to decisions on profit distribution (in the case of structures that are not legal entities) Controlling persons. Controlling persons are defined as the following persons: • A person whose direct and/or indirect participating interest in the organization (for individuals, in conjunction with a spouse and children) is more than 25% • A person who directly and/or indirectly owns more than 10% of a company (for individuals, in conjunction with a spouse and children) if all Russian tax residents have a direct and/or indirect participation interest of over 50% Russian individuals and companies are not treated as controlling persons if their participation in a foreign company is exercised exclusively through direct and/or indirect participation in one or more public Russian tax resident companies or in a foreign public company, provided that certain conditions are met.
1514 R U S S I A N F E D E R AT I O N
Profits of CFCs not subject to Russian profits tax. The profits of the following CFCs are not subject to Russian profits tax: • Noncommercial organizations that do not distribute profits. • Companies in the Eurasian Economic Union. • Companies registered in jurisdictions that exchange information with the Russian Federation for tax purposes and impose an effective tax rate of over 75% of the weighted average tax rate for tax on profit of organizations that is calculated based on standard Russian corporate tax rates applicable to dividends and other income of CFCs. • Foreign companies involved in mineral extraction projects under production-sharing, concession and similar agreements if these companies’ profits from such projects exceed 90% of total income or if no income is derived for the period. • Banks or insurance companies. • Eurobond issuers or companies holding rights under Eurobonds. • “Active” companies (if no more than 20% of their income is passive income; the percentage is reduced to 5% for holding and subholding companies, excluding dividends from active companies). The list of passive income includes, but is not limited to, dividends, royalties, interest, lease or rental income, capital gains and income from the provision of consulting, marketing, legal and other services. The list of passive income is open-ended. • Operators of a new offshore hydrocarbon deposit or a direct shareholder (participant) of such operators. • International holding companies registered in special administrative regions (on Russky Island in Primorsky Territory or on Oktyabrsky Island in Kaliningrad Region). Notification obligations. The types of notification obligations are notification of participation in foreign organizations and notification of CFCs. Taxpayers must notify the tax authorities about the following: • Participation in foreign organizations in which they have an interest of over 10% • Formation of foreign unincorporated structures • CFCs (regardless of whether they make a profit or a loss) Profits of CFCs taken into account. Profits of CFCs are taken into account in determining the tax base of a shareholder if such profits exceed RUB10 million (approximately USD135,135). Profits of CFCs in foreign currencies must be translated into rubles using the average exchange rate value for the calendar year. The fine for non-payment or underpayment of taxes is 20% of the unpaid tax on the profit of each CFC, but not less than RUB100,000 (approximately USD1,351). The fine for the failure to submit documents supporting the value of CFC profits or the provision of documents containing information that is known to be false and the failure to submit CFC notifications or the submission of CFC notification containing false information amounts to RUB500,000 (approximately USD6,757). The fine of RUB1 million (approximately USD 13,513) is set for the failure to submit missing documents at the tax authorities’ request confirming the income of CFC or relating to certain exemptions of CFC rules’ application or the provision of documents containing information that is known to be false.
R U S S I A N F E D E R AT I O N 1515
F. Treaty withholding tax rates Russian legislation currently states that the double tax treaties of the former USSR are still valid. The withholding rates under the USSR’s treaties and the Russian Federation’s treaties are listed in the table below. Like most double tax treaties, the treaty rates do not apply if domestic withholding tax rates (see Section A) are lower. Dividends %
Albania Algeria Argentina Armenia Australia Austria Azerbaijan Belarus Belgium Botswana Brazil Bulgaria Canada Chile China Mainland Croatia Cuba Cyprus Czech Republic Denmark Ecuador Egypt Finland France Germany Greece Hong Kong SAR Hungary Iceland India Indonesia Iran Ireland Israel Italy Japan Kazakhstan Korea (North) Korea (South) Kuwait Kyrgyzstan Latvia Lebanon Lithuania Luxembourg Malaysia Mali Malta
Interest %
10 10 5/15 (tt) 0/15 (k) 10/15 (bbb) 0/15 (ccc) 5/10 (a) 0/10 (xxx) 5/15 (nn) 10 5/15 (b) 0 10 0/10 (yyy) 15 0/10 (xxx) 10 0/10 (ggg) 5/10 (ll) 0/10 (zzz) 10/15 (uuu) 0/15 (aaaa) 15 0/15 (xxx) 10/15 (c) 0/10 (bbbb) 5/10 (ddd) 15 5/10 (sss) 0 5/10 (e) 10 5/15 (aaa) 0/10 (cccc) 5/15 (f) 0/5/15 (f) 10 0 10 0 5/10 (www) 0 10 0/15 (g) 5/12 (h) 0 5/10/15 (i) 0 5/15 (j) 0 5/10 (rr) 7 0/5/10 (ttt) 0 10 0 5/15 (jj) 0 10 0/10 (dddd) 15 0/15 (k) 5/10 (ll) 0/7.5 (ffff) 10 0 10 0/10 (gggg) 5/10 (ss) 10 5/10 (m) 0 10 0/10 (hhhh) 10 0 5/10 (x) 0 0/5 (hhh) 0 10 0/10 (iiii) 5/10 (fff) 0/5/10 (dd) 10 0/5 (kkk) 5/10 (l) 0/10 (jjjj) 5/15 (n) 0 0/15 (jjj) 0/15 (kkkk) 10/15 (p) 0/15 (iii) 5/15 (mmm) 5/15 (mmm)
Royalties %
10 15 15 0 10 0 10 10 0 10 15 15 0/10 (d) 5/10 (eee) 6 10 5 0 10 0 10/15 (www) 15 0 0 0 7 3 0 0 10 15 5 0 10 0 0 10 0 5 10 10 5 5 5/10 (pp) 0 10/15 (o) 0 5
1516 R U S S I A N F E D E R AT I O N Dividends %
Mexico Moldova Mongolia Montenegro Morocco Namibia Netherlands New Zealand North Macedonia Norway Philippines Poland Portugal Qatar Romania Saudi Arabia Serbia Singapore Slovak Republic Slovenia South Africa Spain Sri Lanka Sweden Switzerland Syria Tajikistan Thailand Turkey Turkmenistan Ukraine United Arab Emirates United Kingdom United States Uzbekistan Venezuela Vietnam Non-treaty jurisdictions
10 10 10 5/15 (hh) 5/10 (r) 5/10 (e) 5/15 (s) 15 10 10 15 10 10/15 (u) 5 15 0/5 (lll) 5/15 (hh) 0/5/10 (vv) 10 10 10/15 (w) 5/10/15 (y)(z) 10/15 (aa) 5/15 (bb) 0/5/15 (cc) 15 5/10 (ll) 15 10 10 5/15 (ee)
Interest %
0/10 (uu) 10 0 10 0/10 (nnn) 20 (q) 10 10 0/10 (ooo) 10 0/10 (llll) 5 0 0 10 10 10 10 0/10 (t) 0 0/15 (kkk) 15 0/10 (mmmm) 10 0/10 (v) 10 0/5 (mm) 0 0/15 (nnnn) 10 0/5 (oooo) 10 10 10 0 5 0 10 10 10 0/10 (pppp) 0 0/5 (z)(qq) 5 (z) 0/10 (dddd) 10 0 0 0 0 0/10 (kkk) 4.5/13.5/18 (kk) 0/10 (oo) 0 0/10 (ww) 15 0/10 (qqqq) 10 5 5 0/10 (rrrr) 10
0 (ppp) 0 (qqq) 10/15 (eeee) 0 5/10 (ff) 0 10 0/10 (vvv) 10/15 (xx) 0/5/10 (yy) 10/15 (gg) 10 15
Royalties %
15/20 (ii)
20 (rrr) 0 0 0 10/15 (zz) 15 20
(a) The 5% rate applies if the recipient of the dividends has invested at least USD40,000 or the equivalent in local currency in the payer’s charter capital. The 10% rate applies to other dividends. (b) The 5% rate applies if the beneficial owner of the dividends (except for a partnership) holds directly at least 10% of the capital of the payer of the dividends and if the participation exceeds USD100,000. The 15% rate applies to other dividends. (c) The 10% rate applies if the beneficial owner of the dividends owns at least 10% of the voting shares of the payer or, in the case of a Russian payer that has not issued voting shares, at least 10% of the statutory capital. The 15% rate applies to other dividends. (d) The 0% rate applies to royalties for the following: • Copyrights of cultural works (excluding films and television rights) • The use of computer software • The use of patents or information concerning industrial, commercial or scientific experience, if the payer and the beneficiary are not related persons The 10% rate applies to other royalties.
R U S S I A N F E D E R AT I O N 1517 (e) The 5% rate applies to dividends paid to corporations that hold at least 25% of the capital of the payer and have invested in the payer more than USD100,000 or the equivalent amount in local currency. The 10% rate applies to other dividends. (f) For dividends, the general rate of withholding tax is 15%. However, the 5% rate applies if one of the following conditions is met: • The beneficial owner of the dividends is a company whose shares are listed on a registered stock exchange, provided that no less than 15% of the voting shares of that company are in free float, and it holds directly at least 15% of the capital of the company paying the dividends throughout a 365day period that includes the day of payment of the dividends. • The beneficial owner of the dividends is an insurance undertaking or a pension fund. • The beneficial owner of the dividends is the central bank. For interest, the general rate of withholding tax is 15%. The 5% rate applies if the beneficial owner of the interest is a company whose shares are listed on a registered stock exchange, provided that no less than 15% of voting shares of that company are in free float, and it holds directly at least 15% of the capital of the company paying the interest throughout a 365-day period that includes the day of payment of the interest. The 0% rate applies if the beneficial owner is an insurance undertaking pension fund or bank, or if the interest is paid on government bonds, corporate bonds or Eurobonds listed on a registered stock exchange. (g) The 0% rate applies if the recipient of the interest is the other contracting state or a bank that is more than 51%-owned by the other contracting state. The 15% rate applies to other interest payments. (h) The 5% rate applies if the beneficial owner of the dividends is a company (other than a partnership) that holds directly at least 30% of the capital of the payer of the dividends and if the foreign capital invested exceeds USD100,000 or its equivalent in the national currencies of the contracting states when the dividends become due and payable. The 12% rate applies to other dividends. (i) The 5% rate applies if the recipient of the dividends has invested in the payer at least FF500,000 (EUR76,225) or the equivalent amount in other currency and if the beneficiary of the dividends is a company that is exempt from tax on dividends in its state of residence. The 10% rate applies if only one of these conditions is met. The 15% rate applies to other dividends. (j) The 5% rate applies to dividends paid to corporations that hold a 10% or greater interest in the capital of the payer and have invested in the payer at least EUR80,000 or the equivalent amount in rubles. The 15% rate applies to other dividends. (k) The 0% rate applies if the recipient of the interest is the government of the other contracting state, including local authorities thereof, a political subdivision or the central bank. The 15% rate applies to other interest payments. (l) The 5% rate applies to dividends paid to corporations that hold at least 25% of the capital of the payer and have invested in the payer at least USD100,000 or the equivalent amount in other currency. The 10% rate applies to other dividends. (m) The 5% rate applies if the beneficial owner of the dividends is a company that has held directly at least 15% of the voting power of the company paying the dividends for 365 days ending on the date on which the entitlement to dividends is determined. The 10% rate applies to all other dividends. (n) The 5% rate applies if the recipient of the dividends directly holds at least 10% of the capital of the payer and has invested in the payer more than EUR80,000 or the equivalent amount in local currency. The 15% rate applies to other dividends. (o) The 15% rate applies to royalties for copyrights, including film and radio broadcasts. The 10% rate applies to other royalties. (p) The 10% rate applies if the recipient of the dividends has invested more than FF1 million (EUR152,449) in the payer. The 15% rate applies to other dividends. (q) Royalties are subject to tax in the country of the payer in accordance with that country’s law. (r) The 5% rate applies if the beneficial owner of the dividends owns at least USD500,000 of the shares of the payer. The 10% rate applies to other dividends. (s) The 5% rate applies to dividends paid to corporations that hold at least 25% of the capital of the payer and have invested at least ECU75,000 or an equivalent amount in local currency. The 15% rate applies to other dividends. (t) The 0% rate applies if the recipient of the interest is the government of the other contracting state including local authorities thereof, an instrumentality of that state that is not subject to tax in that state or the central bank. The 10% rate applies to other interest payments.
1518 R U S S I A N F E D E R AT I O N (u) The 10% rate applies if the beneficial owner is a company that, for an uninterrupted period of two years before the payment of the dividends, owned directly at least 25% of the capital of the payer of the dividends. The 15% rate applies to other dividends. (v) The 0% rate applies if the interest is derived and beneficially owned by the other contracting state, a political or administrative subdivision or a local authority thereof or any institution specified and agreed to in an exchange of notes between the competent authorities of the contracting states in connection with any credit granted or guaranteed by them under an agreement between the governments of the contracting states. The 10% rate applies to other interest payments. (w) The 10% rate applies if the beneficial owner of the dividends owns at least 30% of the charter capital of the payer and has directly invested at least USD100,000 in the charter capital of the payer. The 15% rate applies to other dividends. (x) The 5% rate applies to dividends paid to corporations that hold at least 30% of the capital of the payer and have invested in the payer at least USD100,000 or the equivalent amount in local currency. The 10% rate applies to other dividends. (y) The 5% rate applies if the beneficial owner of the dividends (except for a partnership) has invested at least ECU100,000 in the charter capital of the payer and if the country of residence of the beneficial owner of the dividends does not impose taxes on the dividends. The 10% rate applies if one of these conditions is met. The 15% rate applies to other dividends. (z) The treaty does not provide relief for Spanish companies receiving dividends, interest or royalties from Russian sources if more than 50% of the Spanish company is owned (directly or indirectly) by non-Spanish residents. (aa) The 10% rate applies if the beneficial owner of the dividends owns at least 25% of the charter capital of the payer. The 15% rate applies to other dividends. (bb) The 5% rate applies to corporations that hold 100% (at least 30% if the recipient corporation is a part of a joint venture) of the payer and that have invested in the payer at least USD100,000 or the equivalent amount in local currency. The 15% rate applies to other dividends. (cc) If the competent authorities agree, the 0% rate applies to dividends paid to the following: • A pension fund • The government of a contracting state, political subdivision or local authority • The central (national) bank The 5% rate applies if the recipient of the dividends is a corporation that holds at least 20% of the capital of the payer and if, at the time the dividends become due, the amount of the recipient’s investment exceeds CHF200,000. The 15% rate applies to other dividends. (dd) The 0% rate applies to interest paid to the government of a contracting state, including its political subdivisions and local authorities, the central bank or any financial institution wholly owned by that government and to interest derived from loans guaranteed by that government. The 5% rate applies to loan interest paid by one bank to another bank. The 10% rate applies to other interest. (ee) The 5% rate applies to dividends paid to corporations that have invested in the payer at least USD50,000 or the equivalent amount in local currency. The 15% rate applies to other dividends. (ff) The 5% rate applies to dividends paid to corporations holding at least 10% of the voting shares of the payer or, in the case of a Russian payer that has not issued voting shares, at least 10% of the statutory capital. The 10% rate applies to other dividends. (gg) The 10% rate applies to dividends paid to shareholders that have invested at least the equivalent of USD10 million in the payer. The 15% rate applies to other dividends. (hh) The 5% rate applies to dividends paid to corporations that hold at least 25% of the capital of the payer and have invested in the payer at least USD100,000 or the equivalent amount in local currency. The 15% rate applies to other dividends. (ii) The 15% rate applies to interest on certain types of state and municipal securities; the 20% rate applies to other interest. (jj) The 5% rate applies to dividends paid to corporations that hold at least 25% of the capital of the payer and have invested in the payer at least USD100,000 or an equivalent amount in local currency. The 15% rate applies to other dividends.
R U S S I A N F E D E R AT I O N 1519 (kk)
The 4.5% rate applies to royalties paid to entities for copyrights of cinematographic films, programs and recordings for radio and television broadcasting. The 13.5% rate applies to royalties paid to entities for copyrights of works of literature, art or science. The 18% rate applies to royalties paid to entities for patents, trademarks, designs or models, plans, secret formulas or processes and computer software, as well as for information relating to industrial, commercial or scientific experience. (ll) The 5% rate applies to dividends paid to corporations that hold at least 25% of the capital of the payer. The 10% rate applies to other dividends. (mm) The 0% rate applies if the recipient of the interest is the other contracting state or local authorities and governmental agencies of that state. The 5% rate applies to other interest payments. (nn) The 5% rate applies to dividends paid to corporations that hold at least 10% of the capital of the payer and have invested in the payer at least AUD700,000 or an equivalent amount in local currency and if dividends paid by a Russian company are exempt from tax in Australia. The 15% rate applies to other dividends. (oo) The 0% rate applies if the following circumstances exist: • The interest is derived and beneficially owned by the other contracting state, a political or administrative subdivision or a local authority thereof. • The interest is derived and beneficially owned by the central bank or a similar institution specified and agreed to in an exchange of notes between the competent authorities of the contracting states. • The interest is derived with respect to the deferral of payment under commercial credits. The 10% rate applies to other interest payments. (pp) The 5% rate applies to royalties paid for the right to use industrial, commercial or scientific equipment. The 10% rate applies to other royalties. (qq) The 0% rate applies if the interest is paid on a long-term loan (seven or more years) issued by a bank or other credit institution or if the recipient of the interest is the government of the other contracting state, a political subdivision or a local authority. (rr) The 5% rate applies if the beneficial owner is a company (other than a partnership) that holds directly at least 25% of the capital of the company paying the dividends. The 10% rate applies in all other cases. (ss) The 5% rate applies to dividends paid to corporations that hold at least 10% of the capital of the payer and that have invested in the payer at least USD100,000 or the equivalent amount in other currency. The 10% rate applies to other dividends. (tt) The 5% rate applies to dividends paid to corporations that hold at least 25% of the capital of the payer. (uu) The 0% rate applies if any of the following circumstances exist: • The beneficial owner is a contracting state, a political subdivision or the central bank of a contracting state. • The interest is paid by any of the entities mentioned in the preceding bullet. • The interest arises in the Russian Federation and is paid with respect to a loan for a period of not less than three years that is granted, guaranteed or insured, or a credit for such period that is granted, guaranteed or insured, by Banco de México, S.N.C., Banco Nacional de Comercio Exterior, S.N.C., Nacional Financiera, S.N.C. or Banco Nacional de Obras y Servicios Públicos, S.N.C., or interest is derived by any other institution, as may be agreed from time to time between the competent authorities of the contracting states. • The interest arises in Mexico and is paid with respect to a loan for a period of not less than three years that is granted, guaranteed or insured, or a credit for such period that is granted, guaranteed or insured, by The Bank for Foreign Trade (Vneshtorgbank) or The Bank for Foreign Economic Relations of the USSR (Vnesheconombank), or the interest is derived by any other institution, as may be agreed from time to time between the competent authorities of the contracting states. (vv) The 0% rate applies to dividends paid to the Monetary Authority of Singapore, GIC Private Limited, the Central Bank of the Russian Federation and institutions wholly or mainly owned by the Central Bank of the Russian Federation and any statutory bodies or institutions wholly or mainly owned by the governments of a contracting state as may be agreed from time to time between the competent authorities of the contracting states. The 5% rate applies if the recipient of the dividends is a company that holds directly at least 15% of the capital of the company paying the dividends. The 10% rate applies to other dividends.
1520 R U S S I A N F E D E R AT I O N (ww)
(xx)
(yy)
(zz) (aaa) (bbb) (ccc) (ddd) (eee) (fff)
(ggg)
(hhh)
(iii)
(jjj) (kkk) (lll)
The 0% rate applies if the beneficial owner of the interest is the government of a contracting state, a government body of a contracting state, the central bank or the Export-Import bank of Thailand. The 10% rate applies if interest is received by an institution that has a license to carry on banking operations (Russian Federation) or a financial institution including an insurance company (Thailand). The 10% rate applies if the beneficial owner of the dividends (except for a partnership) holds directly at least 10% of the capital of the payer of the dividends and if the participation exceeds USD100,000. The 15% rate applies to other dividends. The 0% rate applies if any of the following conditions is met: • The beneficial owner is a government of a contracting state, the central bank of a contracting state, a political subdivision of a contracting state or a local authority. • The interest is paid by the government of a contracting state, the central bank of a contracting state, a political subdivision of a contracting state or a local authority. • The interest is paid with respect to a loan granted or guaranteed by a public financial institution with the objective to promote exports and development. The 5% rate applies to interest on bank loans. The 10% rate applies to other interest. The 10% rate applies to fees for technical assistance. The 15% rate applies to royalties. The 5% rate applies if the beneficial owner of the dividends (except for a partnership) holds directly at least 25% of the capital of the payer of the dividends. The 15% rate applies to other dividends. The 10% rate applies if the beneficial owner of the dividends holds directly at least 25% of the capital of the payer of the dividends. The 15% rate applies to other dividends. The 0% rate applies if the recipient of the interest is the government of the other contracting state or the central bank. The 15% rate applies to other interest. The 5% rate applies if the beneficial owner of the dividends holds directly at least 25% of the capital of the payer of the dividends. The 10% rate applies to other dividends. The 5% rate applies to royalties paid for the right to use industrial, commercial or scientific equipment. The 10% rate applies to other royalties. The 5% rate applies if the beneficial owner of the dividends (except for a partnership) directly owns at least 25% of the capital of the payer and has invested more than USD75,000 in the capital of the payer. The 10% rate applies to other dividends. The 0% rate applies if any of the following conditions is met: • The recipient of the interest is the government of a contracting state, or a political subdivision or local authority of a contracting state. • The relevant loan is secured by a contracting state, or a political subdivision or local authority of a contracting state. • The loan is issued by a bank or other credit institution of a contracting state. The 0% rate applies if the dividends are paid to the government of a contracting state, a local authority or political subdivision of a contracting state, the central bank or other state institutions, as agreed by the competent authorities. The 5% rate applies to other dividends. The 0% rate applies if any of the following conditions is met: • Interest is paid by the government or local authorities of a contracting state. • Interest is paid to the government or local authorities of a contracting state or to the central bank. • Interest is paid on loans issued under agreements between the governments. The 0% rate applies to dividends paid to Russian tax residents. The 15% rate applies to dividends paid to Malaysian tax residents. The 0% rate applies to interest paid to the government of a contracting state, or a political subdivision or local authority of a contracting state. The 0% rate applies to dividends paid to any of the following: • The government, a political subdivision or a local authority of a contracting state • The central bank • Other government agencies or financial institutions, as agreed by the competent authorities The 5% rate applies to other dividends.
R U S S I A N F E D E R AT I O N 1521 (mmm) Starting 1 January 2021, the ordinary withholding tax rate for dividends and interest under the double tax treaty is increased to 15% (provided that the recipient is a beneficial owner of income). The 5% rate on dividends applies to the following categories of recipients (provided that the beneficial ownership test is met): • A company whose shares are listed on a registered stock exchange, provided that no less than 15% of the voting shares of that company are in free float, and that it holds directly at least 15% of the capital of the company paying the dividends throughout a 365-day period that includes the day of payment of the dividends • An insurance undertaking or a pension fund • The government, a political subdivision or a local authority of a contracting state • The central bank of a contracting state A reduced 5% rate on interest income applies to the following categories of recipients (provided that the beneficial ownership test is met): • A company whose shares are listed on a registered stock exchange, provided that no less than 15% of the voting shares of that company are in free float, and that it holds directly at least 15% of the capital of the company paying the interest throughout a 365-day period that includes the day of payment of the interest • Insurance undertakings or pension funds • Banks • The government, a political subdivision or a local authority of a contracting state • The central bank of a contracting state The 5% rate also applies to the interest on government bonds, corporate bonds and Eurobonds listed on a registered stock exchange. (nnn) The 0% rate applies if the recipient of the interest is the government of a contracting state, or the central or foreign trade bank. The 10% rate applies to other interest payments. (ooo) The 0% rate applies to interest on foreign-currency deposits and interest on loans granted to a contracting state or guaranteed by a contracting state. The 10% rate applies to other interest payments. (ppp) The 0% rate applies to dividends paid to a contracting state or its financial or investment institutions. (qqq) The 0% rate applies to interest paid to a contracting state or its financial or investment institutions. (rrr) The treaty does not cover royalties. (sss) The 5% rate applies if the recipient is a company (other than a partnership) that holds at least 25% of the capital of the payer, and this holding amounts to at least EUR80,000 or its equivalent in any other currency. The 10% rate applies to other dividends. (ttt) The 0% rate applies to dividends paid to the following: • The government of the Russian Federation, a political subdivision or local authority thereof, or the government of the Hong Kong Special Administrative Region (SAR) • The Central Bank of the Russian Federation or the Hong Kong Monetary Authority • Any entity that is wholly or mainly owned by the government of the Russian Federation or by the government of the Hong Kong SAR and that is mutually agreed on by the competent authorities of the two contracting parties The 5% rate applies if the recipient of the dividends is a company (other than a partnership) that holds directly at least 15% of the capital of the company paying the dividends. The 10% rate applies to other dividends. (uuu) The 10% rate applies if the beneficial owner of the dividends holds directly at least 20% of the capital of the payer of the dividends. (vvv) The 0% rate applies if any of the following circumstances exist: • The interest is paid to a contracting state, a political subdivision or a local authority thereof. • The interest is paid to the central bank of a contracting state, an export credit guarantee agency or other similar institution that may from time to time be agreed upon between the competent authorities of the contracting states. • The interest is paid with respect to a commercial loan in the form of deferred payment for goods, equipment and services.
1522 R U S S I A N F E D E R AT I O N (www) The 5% rate applies to dividends if the beneficial owner of the dividends is a company that owns directly at least 25% of the voting stock of the company paying the dividends. The 10% rate applies to all other dividends. The 10% rate applies to royalties for the use of, or the right to use, industrial, commercial or scientific equipment. The 15% rate applies to royalties in all other cases. (xxx) The 0% rate applies if the recipient of the interest is the government or the central bank of a contracting state. (yyy) The 0% rate applies if the recipient of the interest is the government of a contracting state or an institution authorized by such a government. (zzz) The 0% rate applies if the recipient of the interest is any of the following: • The government of a contracting state, a political subdivision or a local authority thereof • The central bank of a contracting state • Any government institution agreed upon in writing by the competent authorities of the contracting states (aaaa) The 0% rate applies if either of following circumstances exist: • The recipient of the interest is the government of a contracting state, a political subdivision thereof or any agency (including a financial institution) wholly owned by that government or political subdivision. • The interest is paid with respect to securities, bonds or debentures issued by the government of a contracting state, a political subdivision thereof or any agency (including a financial institution) wholly owned by that government or political subdivision. (bbbb) The 0% rate applies if any of the following circumstances exist: • The recipient of the interest is the central bank of a contracting state. • The interest is paid to a resident of a contracting state with respect to indebtedness of the other contracting state or of its state authorities, including local authorities thereof. • The interest is paid with respect to a loan made, guaranteed or insured, or a credit extended, guaranteed or insured, by an organization created and wholly owned by the government of a contracting state for the purpose of facilitating exports. (cccc) The 0% rate applies if the recipient of the interest is either of the following: • The government of a contracting state, a political subdivision thereof or a local authority, or a financial institution wholly owned or controlled by that government, political subdivision or local authority • Any organization (including a financial institution) that is financed in accordance with an agreement between the governments of the contracting states (dddd) The 0% rate applies if the recipient of the interest is any of the following: • The government of a contracting state, a political subdivision thereof or a local authority • The central bank of a contracting state • Any government agency or a financial institution agreed upon by an exchange of notes by the competent authorities of the contracting states (eeee) The 10% rate applies to dividends in the source state if the recipient is subject to tax with respect to the dividends in the recipient’s resident state. (ffff) The 0% rate applies if the recipient of the interest is any of the following: • The government of a contracting state, a political subdivision thereof or a local authority • The central bank of a contracting state, the bank for external trade of a contracting state, a state agency for insurance of export credits or a state-owned bank • Any other state agency of a contracting state (gggg) The 0% rate applies if the recipient of the interest is either of the following: • The government of a contracting state or a local authority thereof, the central bank or any agency (including a financial institution) wholly owned by that government or political subdivision • Any resident of a contracting state, if the interest is paid with respect to debt claims guaranteed, insured or indirectly financed by the government of the other contracting state, a local authority thereof or the central bank (hhhh) The 0% rate applies if the recipient of the interest is the government of a contracting state, a political subdivision thereof or a local authority, or any institution of that government, political subdivision or local authority. (iiii) The 0% rate applies if the recipient of the interest is any of the following: • The government of a contracting state • The central bank of a contracting state
R U S S I A N F E D E R AT I O N 1523 • A government agency or an authorized financial institution agreed upon by the exchange of notes by the competent authorities of the contracting states (jjjj) The 0% rate applies if either of the following circumstances exist: • The recipient of the interest is the government of a contracting state, including its political subdivisions and local authorities, the central bank or any financial institution wholly owned by that government. • The interest is paid on loans guaranteed by the government of a contracting state. (kkkk) The 0% rate applies if any of the following circumstances exist: • The interest is paid to a resident of the Russian Federation with respect to an approved loan as defined under Malaysian law. • The interest is paid to the government or the central bank of a contracting state. • The interest is paid in a contracting state with respect to a loan provided, guaranteed or insured by the government of the other state, which may be agreed upon between the competent authorities of the contracting states. (llll) The 0% rate applies if the recipient of the interest is either of the following: • The government of a contracting state, a political subdivision thereof or a local authority • Any government institution agreed upon in writing by the competent authorities of the contracting states (mmmm) The 0% rate applies if the recipient of the interest is the government of a contracting state, a political subdivision or a local authority thereof, or the central bank. (nnnn) The 0% rate applies to the following interest: • Interest paid in the Russian Federation to the government of Romania, its national bank, its bank for foreign trade or Eximbank • Interest paid in Romania to the government of the Russian Federation, its central Bank or its bank for foreign trade (oooo) The 0% applies if any of the following circumstances exist: • The interest is paid by the government of a contracting state or a local authority thereof. • The interest is paid to the government of a contracting state or a local authority thereof, or any agency or instrumentality (including a financial institution) wholly owned by the contracting state or local authority thereof. • The interest is paid to any other agency or instrumentality (including a financial institution) with respect to loans made in application of any agreement concluded between the governments of the contracting states. (pppp) The 0% rate applies to interest paid with respect to a loan made or guaranteed by the government of a contracting state, a local authority thereof, the Bank of Russia or the South African Reserve Bank. (qqqq) The 0% rate applies to the following interest: • Interest paid in the Russian Federation to the government of Turkey, its central bank or Eximbank • Interest paid in Turkey to the government of the Russian Federation, its central bank or its bank for foreign trade (rrrr) The 0% rate applies to the following interest: • Interest paid in the Russian Federation to the government of Ukraine, its national bank, a local authority or any other government body, or paid with respect to loans guaranteed by them • Interest paid in Ukraine to the government of the Russian Federation, its central bank or any other government body, or paid with respect to loans guaranteed by them
The Russian Federation has signed tax treaties with Estonia, Ethiopia, Georgia, Laos, Mauritius and Oman, as well as a new treaty with Belgium and a protocol to the tax treaty with Luxembourg, but these treaties are not yet in force. The protocol to the tax treaty with Luxembourg will become effective from 1 January 2022. The Russian Federation is negotiating a tax treaty with Bosnia and Herzegovina.
1524 R U S S I A N F E D E R AT I O N
The Russian Federation is renegotiating its tax treaties with Germany, Malaysia, the Netherlands, Switzerland and the United Kingdom. On 30 April 2020, the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS Multilateral Instrument [MLI]) entered into force for the Russian Federation with respect to all articles of the MLI and applies from 1 January 2021. Details of its application with respect to particular double-tax treaties may be found on the OECD website. Among the most important changes that may affect foreign businesses in the Russian Federation are stricter measures against avoidance of a private equity status through a dependent agent, splitting up contracts or preparatory and auxiliary activity, as well as rules for limitations of benefits under a double-tax treaty. One of the most important restrictions for the minimum withholding tax on dividends, which is a 365-day holding period for shares on which the dividends are paid, also applies from 1 January 2021.