Tax disclosure formats for OFZ bonds, regional or municipal bonds, applicable with effect from 1 January 2021

Attn.: NSD's Clients

As a follow-up to the communication posted on 31 July 2020, please be advised as follows:

1. NSD’s inquiry and the response of the Ministry of Finance of the Russian Federation No. 03-08-05/83273 dated 23 September 2020, which describes tax disclosure formats applicable with effect from 1 January 2021, have been posted in the Tax Management section of NSD’s official website.

According to the clarifications of the Russian Ministry of Finance, with effect from 1 January 2021, upon payment of income on OFZ bonds, regional or municipal bonds, to non-Russian organizations acting on behalf of third parties, the amount of tax will be calculated and withheld by the securities depository acting as withholding agent on the basis of aggregate information disclosed, as provided for by Articles 310.1 and 214.6 of the Russian Tax Code, disaggregated by taxpayers' tax jurisdictions.

Accordingly, starting from 1 January 2021, it will be required to submit tax disclosures both for individuals and organizations for the above bond types, similar to tax disclosures made when income is paid on corporate bonds.

Therefore, in order to apply reduced tax rates (or tax exemptions), as provided for by the Russian Tax Code or double taxation treaties of the Russian Federation, aggregate information to be disclosed to the withholding agent will have to include such details as: the jurisdictions of which the persons authorized to exercise rights attached to the securities (or the beneficial owners of the securities) being beneficial owners of income are tax residents; and the provisions (a reference to the provisions) of the Russian Tax Code or the relevant double taxation treaty of the Russian Federation, which provide for the reduced tax rate (or tax exemption).

In addition, in accordance with paragraph 8 of Article 310.1 of the Russian Tax Code, if the person authorized to exercise rights attached to the securities (or the beneficial owner of the securities) is a Russian organization, information regarding the quantity of securities, which is to be disclosed to the withholding agent, must include that organization's taxpayer identification number.

2. With effect from 1 January 2021, the relevant changed will be introduced in the List of Tax Rates and References under the Russian Tax Code. The following lines will be added to the List:

3. Example #5: “Payment of income on OFZ bonds” has been added to Paragraph 5 “Tax disclosure examples” of “Tax Management – Foreign Nominees” section of NSD's official website.