Increasing the tax on the withdrawal of income will affect the transit jurisdiction

typically, companies in such jurisdictions are created for the purpose of application of reduced rates established in the agreements on avoidance of double taxation.

on Wednesday, Russian President Vladimir Putin in address to the nation said that all payments of income (interest and dividends), stretching from Russia in an offshore jurisdiction, should be subject to appropriate tax of 15%.

Photo: iStock income on deposits of over 1 million rubles introduced income tax

“Now two-thirds of such funds, and in fact it is the income of specific individuals, as a result of different types of schemes, the so-called optimization subject to a real tax rate of only 2%, while citizens of even small wage pay income tax at 13%, the President said. Is, of course, to put it mildly, not fair.”

the tax Increase will not affect income on Eurobonds and on bonds in General, Russian companies and loans provided by foreign banks.

it is Planned that these changes will come into force on 1 January 2021 and will not apply to the income paid from Russia to 2020, the Finance Ministry said.