Russian cos subject to financial sanctions to be exempt from profit tax on sale of Russian shares in 2022
MOSCOW. Dec 12 (Interfax) - Russian companies subject to financial sanctions will be able to sell shares in Russian companies in 2022 without paying profit tax if they owned the shares for more than one year as of the date of the sale, according to government amendments submitted to the State Duma.
The amendments to bill No. 227038-8 were approved by the Duma Budget and Taxation Committee on Friday.
Under the amendments, a zero tax rate may be applied to profit on transactions carried out in 2022 to sell or otherwise divest (or cancel) shares and equity stakes in Russian organizations received by taxpayers subject to sanctions at the time of such transactions. The sanctions must consist of bans or restrictions on settlements, financial transactions and transactions related to debt financing, acquisition or disposal of securities.
The bill states that the zero tax rate will be applied on the condition that on the date of sale the sold shares or stakes continuously belonged to the taxpayer based on the right of ownership or other proprietary interest for more than one year.
Deputy Finance Minister Alexei Sazanov recalled at the Budget Committee meeting that now the profit tax exemption applies to the sale of shares if they have been owned by the seller for more than five years. The changes are being made at the request of the Russian Union of Industrialists and Entrepreneurs and banks hit by sanctions, he said.
"The change is in effect only for 2022, only in regard to shares sold in 2022," Sazanov said.
The Duma plans to consider the bill in the second reading on December 13.
The Duma passed a similar bill for retail investors in June 2022 under which individuals subject to western sanctions can sell shares or equity stakes in Russian companies in 2022 without paying personal income tax on the sale if on the date of sale the sold shares or stakes continuously belonged to the taxpayer based on the right of ownership or other proprietary interest for more than one year.