19.08.08

Russia’s Ministry of Finance has said that Russian organizations must withhold a profit tax from all benefits paid to the foreign company if registration of a foreign company in its country of origin is not verified by that country’s competent authority. This applies only if the foreign organization does not have a permanent representation in Russia but is permanently located in a country sharing a double-taxation treaty with the RF. MinFin insists that this requirement is based on article 312 paragraph 2 of the Tax Code of the RF (Letter of the Ministry of Finance # 03-03-06/1/411 from July 18, 2008).

The same letter explains that Russian insurance agencies must withhold profit tax from all payments to foreign policy holders for insurance of cargo transported on the territory of the RF and Europe. This is due to the fact that all benefits paid to foreign companies based on insurance contracts, excluding reinsurance premiums and bonuses, are viewed as profits received from sources within the RF and are subject to taxation at source (in accordance with international tax agreements).

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Source: Российский налоговый портал