Important changes in taxation of dividends and share sales

On November 23, amendments were adopted to certain articles of the Tax Code of the Russian Federation.

Here, we take note of the main changes of corporate income tax discount rates.

Company shares / corporate equity sales allowances

As a rule, share sale income held for more than 5 years is not subject to tax.

Allowances are cancelled in those instances where more than 50% company's assets is composed of real property assets located on the territory of the Russian Federation.

Zero dividend discount rate

The preferential zero discount rate on dividends payment for foreign companies, which "voluntarily" avowed themselves as tax residents of the Russian Federation, is cancelled. Previously, the this applied only to companies that were forcibly assigned this status.

However, from 01.01.2021 to 31.12.2023 a transitional period was introduced, during which the right to the benefit are saved, pending the following conditions:

- the foreign organization continuously holds at least 50% of the shares over the course of one year;

- the source and recipient companies of dividends are not registered in a state blacklisted by the Ministry of Finance (otherwise the benefit will be lost from 2021);

- dividends (received from Russian companies) are credited to accounts of Russian banks.

Read about the most important news for businesses in Russia in our last Bellerage Quarterly