Russia to extend special accounting procedure for interest income from subsidiaries abroad until end- 2029 - source

MOSCOW. Feb 3 (Interfax) - The Russian Finance Ministry proposes to extend until December 31, 2029, the special procedure for recognizing income in the form of interest received from foreign debtor organizations which, due to sanctions, cannot transfer interest to Russian companies which own more than a 50% stake in them.

A source told Interfax the ministry proposed the relevant amendment for the second reading of bill No. 752996-8.

The rule that interest income for 2023-2024 is recognized on the date of receipt (not accrual) of funds, but no later than March 31, 2025, was introduced on January 1, 2023. This applies to interest on the debts of foreign organizations if a Russian taxpayer owns more than 50% of such an organization, and applies if restrictive measures were imposed against this organization in 2022-2024, due to which interest stopped being accrued.

The amendments extend the period for receiving interest income for the period 2023-2029, and clarify that this concerns sanctions imposed after March 5, 2022. In addition, they would specify that the date funds are credited to the accounts of the Russian organization (paid at banks, to a digital ruble account, at the till), as well as the repayment of debt to the taxpayer in another way, is recognized as the date income is received. For interest income added to principal debt, the date the principal is repaid is considered to be the data of receipt of income.