05.07.10

Russia’s Federal Tax Service (FTS) has notified taxpayers and tax agencies of the proper procedure for calculating, paying, and withholding deductions on income received from a source in Russia by a foreign organization. This issue was outlined in Letter #ShS-37-3/2379@ dated 05-25-2010 and is supported by the Ministry of Finance.

According to Article 309, Point 1 of the Tax Code, the Russian organization (or the foreign organization’s representative office in Russia) should calculate taxes and deductions in the currency the income was received in (except in certain circumstances specified by Article 310, Point 2 of the Tax Code). However, the taxpayer should always pay the tax to the Russian government in rubles (according to Article 310, Point 1 of the Tax Code). At the same time, Article 287 allows the taxpayer to pay the tax (with deductions already withheld) on the day the income is received or up to three after.

In any case, tax calculated in a foreign currency is converted into rubles according to the Russian Central Bank’s exchange rate on the date that the tax is paid.

Translated by Alinga Consulting Group.

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Source: www.rnk.ru