Corporate tax in Russia

Summary

Corporate Profits Tax Rate (%) 0 / 15.5 / 20 (a) (b)
Capital Gains Tax Rate (%) 0 / 15.5 / 20 (a) (c)
Branch Tax Rate (%) 15.5 / 20 (a)
Withholding Tax (%)
Dividends 0 / 13 / 15 (d)
Interest on Certain Types of State and
Municipal Securities
15 (e)
Other Interest 20 (e)
Royalties from Patents, Know-how, etc. 20 (e)
Income from the Operation, Maintenance or Rental of Vessels or Airplanes in
International Traffic
10 (e)
Payments of Other Russian-Source Income
to Foreign Companies
20 (e)
Branch Remittance Tax 0
Net Operating Losses (Years)
Carryback 0
Carryforward 10

a) The basic corporate profits tax rate consists of a 2% rate payable to the fed­eral government and rates ranging from 13.5% to 18% payable to the regional governments. The regional governments set the rates applicable to their respective regions.

b) The 0% rate applies to profits of companies performing educational and medical activities. 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 acquired after 1 January 2011 and 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.

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 2% rate payable to the federal government and rates ranging from 13.5% to 18% payable to the regional governments. The regional gov­ernments set the rates applicable to their respective regions. As a result, the basic corporate profits tax rate varies from 15.5% to 20%, depending on the rate set by the regional government. A 0% tax rate applies to profits of Russian companies performing edu­cational activities 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. The 0% tax rate applies from 1 January 2011 to 1 January 2020. Reduced profits tax rates may also apply to residents of regions that provide special economic regimes.

Capital gains. Capital gains are generally included in taxable in­come 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 tax residents acquired after 1 January 2011 and held for at least five years. The disposal of such shares or participation interests is subject to a 0% rate if shares or participation interests satisfy one of the following con­ditions:

  • They are not circulated on the organized securities market.
  • They are classified as securities circulated on the organized securities market, and they qualify as shares in a company in the high-technology (innovation) sector.
  • They are shares in a Russian tax resident in which the value of immovable property located in the Russian Federation does not exceed 50% of the tax resident’s total assets.

Capital gains derived by a foreign company without a tax presence in the Russian Federation from the sale of shares in a Russian tax resident 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. Effective from 1 January 2016, such specific rules apply only to transactions considered to be controlled 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. 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 withholding 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 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. If dividends are received from strategic shareholdings in a foreign legal entity, additional criteria must be met.

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.

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.

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. The following table con­tains the ranges of threshold values.

Currency of indebtedness Lower threshold Upper threshold
Rubles (RUB) 75% of the keyrate of the CBR (a) 125% of the key rate of the CBR
Euro (EUR) EURIBOR (b) + 4 percentage points EURIBOR + 7 percentage points
Chinese yuan (CNY) SHIBOR (c) + 4 percentage points SHIBOR + 7 percentage points
Pounds sterling (GBP) LIBOR (d) in GBP + 4 percentage points LIBOR in GBP + 7 percentage points
Swiss francs (CHF) LIBOR in CHF + 2 percentage points LIBOR in CHF + 5 percentage points
Japanese yen (JPY) LIBOR in JPY + 2 percentage points LIBOR JPY + 5 percentage points
Other (including US dollar [USD]) LIBOR in USD + 4 percentage points LIBOR in USD + 7 percentage points

a) Central Bank of Russia

b) Euro Interbank Offered Rate

c) Shanghai Interbank Offered Rate

d) 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 ex pens es 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 USD530) for assets put in use before 1 January 2016 and RUB100,000 (approximately USD1,300) 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 straight-line 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 to the following 10 years.

Groups of enterprises. Related enterprises may not offset profits and losses among members of a group.

Other significant taxes

The following table summarizes other significant taxes.

Nature of tax Rate (%)
Value-added tax, on goods sold and services
rendered, excluding exports and charter
capital contributions
Standard rate 18
Certain food products and children’s goods 10
Many exports of goods and certain services 0
Assets tax; rate varies by type of tax base
Net book value; maximum rate 2.2
Cadastral value; maximum rate 2
Tariffs
Export, rate varies by type of good Various
Import Various
Contributions to Social Insurance Fund;
on annual payments to employee
On payments up to RUB718,000
(approximately USD9,600)
2.9
On payments in excess of RUB718,000 0
Contributions to Pension Fund on annual
payments to employee
On payments up to RUB796,000
(approximately USD10,600)
22
On payments in excess of RUB796,000 10
Contributions to Federal Medical Insurance
Fund on annual payments to employee 5.1
Supplementary contributions for workplace
accidents; rate varies by industry
0.2 to 8.5
Income tax withholding by employers
Residents 13
Nonresidents 30
Mineral extraction tax; imposed on the value
or volume of extracted commercial minerals
Various
Transport tax Various

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.

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 the following:

  • Cross-border transactions with related parties
  • Domestic transactions with related parties if the annual total turnover from the transactions exceeds RUB1 billion (approxi­mately USD13 million)
  • Cross-border transactions involving certain types of commodi­ties (for example, crude oil, oil products, fertilizers and metals)
  • Transactions with independent companies located in certain jurisdictions providing beneficial tax regimes if the annual total turnover from the transactions exceeds RUB60 million (approx­imately USD800,000)

The providing of loans and guarantees is excluded from transfer-pricing 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% (20% for the period of 2014 through 2016) 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 transfer-pricing ad justment relates to 2012 or 2013 or 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. 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.

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 subsidiary 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 com-pany’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% (50% before 1 January 2016)
  • 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.

Profits of CFCs not subject to Russian profits tax. The profits of the following CFCs are not subject to Russian profits tax:

  • Non-commercial 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.
  • Foreign structures without a legal entity (for example, trusts). Such structures are excluded only if they are unable to distrib­ute profits to participants or beneficiaries under the law or constitutional documents (bylaws or founding documents for the structures).
  • 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.

Notification obligations. The two 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

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 USD130,000). This amount of this threshold is effective from 2017. A threshold of RUB30 million (approximately USD400,000) applies in 2016. A methodology of profit calculation is based on dividing the types of income into “active” and “passive.”

Profits of CFCs in a 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 USD1,300).

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 following table. Like most double tax treaties, the treaty rates do not apply if domestic withholding tax rates (see Section A) are lower.

 

   
  Dividends

%

Interest

%

Royalties

%

Albania 10 10 10
Algeria 5/15 (tt) 0/15 (k) 15
Argentina 10/15 (bbb) 0/15 (ccc) 15
Armenia 5/10 (a) 0 0
Australia 5/15 (nn) 10 10
Austria 5/15 (b) 0 0
Azerbaijan 10 10 10
Belarus 15 10 10
Belgium 10 0/10 (ggg) 0
Botswana 5/10 (ll) 10 10
Bulgaria 15 15 15
Canada 10/15 (c) 10 0/10 (d)
Chile 5/10 (ddd) 15 5/10 (eee)
China 10 10 10
Croatia 5/10 (e) 10 10
Cuba 5/15 (aaa) 10 5
Cyprus 5/10 (f) 0 0
Czech Republic 10 0 10
Denmark 10 0 0
Egypt 10 0/15 (g) 15
Finland 5/12 (h) 0 0
France 5/10/15 (i) 0 0
Germany 5/15 (j) 0 0
Greece 5/10 (rr) 7 7
Hungary 10 0 0
Iceland 5/15 (jj) 0 0
India 10 10 10
Indonesia 15 0/15 (k) 15
Iran 5/10 (ll) 7.5 5
Ireland 10 0 0
Israel 10 10 10
Italy 5/10 (ss) 10 0
Japan 15 10 0/10 (m)
Kazakhstan 10 10 10
Korea (North) 10 0 0
Korea (South) 5/10 (x) 0 5
Kuwait 0/5 (hhh) 0 10
Kyrgyzstan 10 10 10
Latvia 5/10 (fff) 5/10 (dd) 5
Lebanon 10 5 5
Lithuania 5/10 (l) 10 5/10 (pp)
Luxembourg 5/15 (n) 0 0
Macedonia 10 10 10
Malaysia 0/15 (jjj) 15 10/15 (o)
Mali 10/15 (p) 0/15 (iii) 0
Malta 0/5/10 (mmm) 5 5
Mexico 10 0/10 (uu) 10
Moldova 10 0 10
Mongolia 10 0/10 (nnn) 20 (q)
Montenegro 5/15 (hh) 10 10
Morocco 5/10 (r) 0/10 (ooo) 10
Namibia 5/10 (e) 10 5
Netherlands 5/15 (s) 0 0
New Zealand 15 10 10
Norway 10 0/10 (t) 0

 

Philippines 15 0/15 (kkk) 15
Poland 10 10 10
Portugal 10/15 (u) 0/10 (v) 10
Qatar 5 0/5 (mm) 0
Romania 15 15 10
Saudi Arabia 0/5 (lll) 5 10
Serbia 5/15 (hh) 10 10
Singapore 5/10 (vv) 7.5 7.5
Slovak      
Republic 10 0 10
Slovenia 10 10 10
South Africa 10/15 (w) 10 0
Spain 5/10/15 (y)(z) 0/5 (z)(qq) 5 (z)
Sri Lanka 10/15 (aa) 10 10
Sweden 5/15 (bb) 0 0
Switzerland 0/5/15 (cc) 0 0
Syria 15 10 4.5/13.5/
      18 (kk)
Tajikistan 5/10 (ll) 0/10 (oo) 0
Thailand 15 0/10 (ww) 15
Turkey 10 10 10
Turkmenistan 10 5 5
Ukraine 5/15 (ee) 10 10
United Arab      
Emirates 0 (ppp) 0 (qqq) 20 (rrr)
United      
Kingdom 10 0 0
United States 5/10 (ff) 0 0
Uzbekistan 10 10 0
Venezuela 10/15 (xx) 0/5/10 (yy) 10/15 (zz)
Vietnam 10/15 (gg) 10 15
Non-treaty countries 15 15/20 (ii) 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.

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) The 5% rate applies to dividends paid to shareholders that have invested in the payer at least EUR100,000 or the equivalent amount in local currency. The 10% rate applies to other dividends.

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 at the moment 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 0% rate applies to royalties paid for the use of, or the right to use, copy­rights of literary, artistic or scientific works, including cinematographic films and films or tapes for radio or television broadcasting. The 10% rate applies to royalties paid for the use of, or the right to use, patents, trademarks, designs or models, plans, secret formulas or processes, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

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.

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 re cip ient 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 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.

(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 Ser-vicios 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 5% rate applies if the beneficial owner of the dividends is the govern­ment of the contracting state or if the beneficial owner of the dividends holds directly at least 15% of the capital of the payer of the dividends and has invested in the payer at least USD100,000. The 10% rate applies to other dividends.

(ww) 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).

(xx) 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.

(yy) 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.

(zz) The 10% rate applies to fees for technical assistance. The 15% rate applies to royalties.

(aaa) 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.

(bbb) 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.

(ccc) 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.

(ddd) 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.

(eee)     The 5% rate applies to royalties paid for the right to use industrial, com­mercial or scientific equipment. The 10% rate applies to other royalties.

(fff)      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.

(ggg) 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.

(hhh) 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.

(iii)      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.

(jjj)      The 0% rate applies to dividends paid to Russian tax residents. The 15% rate applies to dividends paid to Malaysian tax residents.

(kkk) 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.

(lll)      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.

(mmm) The 0% rate applies to dividends paid to a pension fund if such dividends are derived from investments made out of assets of the pension fund. The 5% rate applies to dividends paid to companies that hold at least 25% of the capital of the payer, and this holding amounts to at least EUR100,000. The 10% rate applies to other dividends.

(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.

The Russian Federation has signed tax treaties with Brazil, Esto­nia, Ethiopia, Georgia, the Hong Kong Special Administrative Region (SAR), Laos, Mauritius and Oman, but these treaties are not yet in force. The Russian Federation and China have signed a new tax treaty to replace the existing treaty, but the new treaty is not yet in force.

The Russian Federation is negotiating tax treaties with Bangladesh, Barbados, Bosnia and Herzegovina, Ecuador, Fiji and Seychelles.

The Russian Federation is renegotiating its tax treaties with Austria and the Netherlands and negotiating new treaties with Belgium, Kuwait and Malaysia.