Newsletter EN

The Ministry of Finance has highlighted a particular detail regarding interest within the context of the conditions for suspending double taxation agreements.

In light of the issuance of Decree No. 585, dated August 08, 2023, by the President of the Russian Federation, pertaining to the suspension of specific provisions within international taxation treaties of the Russian Federation, the Ministry of Finance of the Russian Federation wishes to provide notice.

In the case of income payments in the form of interest to entities located in non-friendly countries, including export credit agencies and organizations engaged in banking activities under their respective laws, which were previously exempt from or subject to reduced withholding tax rates under international tax treaties of Russia, the application of which has been suspended by the Decree, tax agents are entitled to continue not to calculate and withhold corporate income tax (or calculate and withhold such tax at the corresponding reduced rate) at the source of payment, provided that such foreign entities (agencies) have a bona fide right to the income received.

Tax agents, as previously, are not required to calculate and withhold income tax on interest if the recipients possess a legitimate entitlement to the income. Additionally, the option to continue calculating and withholding tax at a reduced rate remains in effect. This refers to the interest paid to export credit agencies and banking organizations.

The necessary amendments will be introduced to the Tax Code of the Russian Federation in the fall session of the State Duma. Document: Information of the Ministry of Finance of the Russian Federation