Income tax on dividends may increase in Russia

21.10.2014

 Russian State Duma adopted in the first hearing the Bill of Federal Law No. 605370-6 «On amending Tax Code of Russian Federation and other legislative acts of Russian Federation».

The Bill provides for an increase in the tax rate on personal income in respect of income from participation in organizations received as dividends by individuals who are tax residents of the Russian Federation, from 9 to 13 percent.

Source: http://asozd2c.duma.gov.ru/addwork/scans.nsf/ID/B58BDE7F0C89429443257D570050C205/$FILE/605370-6.PDF?OpenElement

Expert’s opinion

As for now the tax rate on dividends received by natural persons in Russian Federation is relatively lowв РФ достаточно не высока – 9 %. Exactly this tax rate gave and still gives all grounds for legally working and paying taxes, and going into the shadow for businesses.

Overall the increase by 4% is not so critical, it is probably not even substantial. Nonetheless, any increase raises questions once again or even maybe an idea to look at the treaties on avoidance of double taxation with Cyprus or United Kingdom in order to built your business structure correctly.

Irina Lomakina ( Director of Moscow Office, Honest&Bright)