26.04.07

The State Duma approved the second reading of a draft bill which would make dividend profits received from filial companies tax-free for holding companies. In an attempt to move profit centers for Russian companies from abroad into Russia, the State Duma and the Ministry of Finance have limited the exemption. These limits, some fear, have made it practically unattainable for companies to use. 

There are four conditions:

1. A holding must own a share of not less than 50% of the charter capital of the dividend-paying company;
2. the share must be owned by the holding continuously for not less than one year;
3. the value of the share must be worth a minimum of 500 million rubles (approximately $20 mln);
4. the dividend-paying company must not be registered in an offshore zone. It is worth mentioning that official listing of offshore zones does not exist yet. The Ministry of Finance is planning to put together such a list specifically for this law.

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