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Russia Ratifies Double Tax Treaties


The Russian government has ratified their Double Tax Treaties (DTT) with Latvia and Argentina, as well as the protocol with their DTT with Switzerland. Taxand Russia discusses the agreements made between the countries within each DTT.

The main discussions between Russia and Argentina are on the rates of taxes on dividends, royalty and interest. The general rate of withholding tax on dividends is 15%, but if an entity is a beneficial owner of more than 25% of shares, the rate will be 10%. Interest as well as royalties may be withheld, but if the recipient is a beneficial owner, the rate must not be more that 15%.

The general rate of withholding tax on dividends is 10%, but if a shareholder is a legal entity (not a partnership) and the amount of the investment is more than USD 75,000, the rate is 5%. The general rate of taxation on interest is 10%, but if the loan is issued by a bank or other financial organisation, the rate will be 5%. The general rate of taxation on royalties must not be more than 5% if a recipient is a beneficial owner.

There are new terms regarding information exchange added to Russia's DTT with Switzerland. These terms cover issues with taxes on income, capital gains, and property, as well as indirect taxes. Most importantly, it clarifies that a tax authority must not provide another party to which the DTT applies with confidential information. However this rule does not cover bank secrecy, so Swiss banks, which are famous for their level of information safety, must disclose information about their clients at the request of tax authorities.


Taxand's Take

The Protocol to the DTT with the Swiss should make taxpayers change some of their tax optimisation schemes, but it is a positive development. It may be a useful instrument for Russian authorities to fight against tax avoidance and corruption.
The ratification of the DTTs with Latvia and Argentina is very useful will influence trade and economic connections between these countries and Russia.

Your Taxand contact for further queries is:
Andrey Tereschenko
T. +7 495 967 00 07

Taxand's Take Author