Changes in Income Tax on Securities from 2021 in Russia

Tue, 30/06/2020

New measures to increase tax rates for domestic and foreign investors

The Russian authorities have initiated a number of measures with the aim of increasing tax rates on dividend and interest payments for certain categories of domestic and foreign investor.

According to Federal Law 102-FZ, coming into force on January 1, 2021, the personal income tax will be applied at source to gross interest amounts paid on all government, municipal and corporate bonds to individual investors (both domestic and foreign). 

The statutory tax rates will be as follows:

  • 13% for individual investors – Russian tax residents
  • 30% for individual investors – foreign tax residents

 In addition to the aforementioned, it was announced that the Russian authorities plan to increase the actual tax rates for income paid from the Russian sources to the investors (both individuals and legal entities) domiciled in certain foreign jurisdictions to 15%, who are currently enjoying lower tax rates according to the DTTs. 

In line with this initiative, the Ministry of Finance has already addressed their counterparts in Cyprus, Luxembourg and Malta with the official request of increasing the DTT rates for dividends and certain types of interest payments to 15%. It is expected that the DTT amendments with these countries may come into force by the end of 2020. Otherwise, if the agreement is not achieved, the Russian government reserves the right to terminate the tax treaties. Same steps to amend the DTT provisions with other countries might also ensue.

 AO UniCredit Bank will continue to monitor the developments related to Russian tax regulations and will inform the clients about any further changes in due time.