New compliance requirements to enjoy the reduced withholding income tax rates in Russia: Beneficial ownership confirmation

Starting 1 January 2017 for application of the reduced withholding income tax rates envisaged by Double Tax Treaties (hereinafter – the “DTT”) the foreign recipient of income is obliged to provide the Russian payer of income the following documents:

A. a certificate confirming its residency in the treaty state certified by competent authorities (the tax residency certificate);

B. documents confirming that the recipient of income is the beneficial owner of such income (the beneficial ownership confirmation).

In case these documents are not provided, the Russian withholding income tax (hereinafter – the “WHT”) shall be withheld at a general WHT rate, which is 15% for dividends and 20% for interest and royalties.Russian tax legislation does not provide for any clear guidelines on the form and content of the beneficial ownership confirmation. 

Please find more information in Mazars alert below.

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