1. Amendments applicable to Russian tax residents
The tax rate applicable to dividends on shares in Russian companies (including depositary receipts on shares in Russian companies) will increase from 9% to 13%, effective from 1 January 2015, for Russian tax residents, both legal entities and individuals.
2. Amendments applicable to non-Russian organizations acting on behalf of third parties
Effective from 1 January 2015, the 30% tax rate will not apply to dividends on shares in Russian companies (including depositary receipts on shares in Russian companies) payable to non-Russian entities acting on behalf of third parties. Since 2014, the 30% tax rate has been applicable by Russian securities depositories as withholding agents in the event of non-disclosure of the actual recipient of income on securities (beneficial owner or beneficiary). Effective from 1 January 2015, with respect to non-disclosed securities, withholding agents will apply the standard tax rate of 15% applicable to Russian non-residents.
3. The new key concepts introduced into the Russian Tax Code:
- Beneficial owner/beneficiary;
- Tax residency for legal entities;
- Controlled foreign companies.
Russia is now in the process of establishing an efficient mechanism to prevent taxpayers from using low-tax jurisdictions to receive improper preferences and tax benefits. In addition, there were certain developments in the Russian tax laws that relate to taxation of, and control over, foreign organizations.
New provisions have been introduced, which will govern taxation of income of controlled foreign companies (CFC). This will allow Russian tax authorities to impose taxes on retained earnings of foreign companies or other entities at the level of their controlling persons resident in the Russian Federation. The new provisions will apply to income of foreign companies for 2015.