26 Mar 2020 12:24

Russian MinFin gets a month to elaborate all double taxation treaties

MOSCOW. March 26 (Interfax) - Russian Prime Minister Mikhail Mishustin has given the Finance Ministry a month to elaborate all treaties with other countries on avoidance of double taxation where this concerns setting a new tax rate on dividends moved offshore.

"As regards monies moved offshore from our country in the form of dividends payments, I am giving the Finance Ministry a month to work on all double taxation treaties. The tax on dividends moved abroad will be at least 15%. If there is a refusal on their part to consider this issue then we will have to pull out these agreements unilaterally," he said at a Cabinet meeting.

Russian President Vladimir Putin said in a televised address to the nation in connection with the coronavirus epidemic on March 25 that the tax on dividends moved to accounts abroad should be raised to 15% and that agreements on the avoidance of double taxation should be amended accordingly.

"All gains in the form of interest and dividends that are moved from Russia abroad, to offshore jurisdictions, should be taxed appropriately. At present two-thirds of this money - essentially it's the money of specific individuals resulting from a variety of schemes, so-called optimization - two-thirds of it is actually being taxed at just 2%. At the same time our citizens are paying 13% income tax, even on modest salaries, and that is unfair, to put it mildly. So I am suggesting that, for those who move their gains in the form of dividends to accounts abroad, a tax of 15% on such dividends be stipulated," Putin said.

"Of course, this would require adjusting our double taxation agreements with some countries. I ask the government to go about this work," Putin said.

"If foreign partners do not accept our proposal, Russia will withdraw from those agreements unilaterally," he said.

"Let's start with countries through which significant resources or Russian origin pass, which is the most sensitive for our country," Putin said.