19.05.09

As property is distributed among the shareholders of a company undergoing liquidation, profit tax is determined by the difference between the monetary sum received as a result of the liquidation (the market value of the received property and property rights) and the cost of acquiring a share of the liquidating organization, or the cost basis, as explained by the Russian Finance Minister in letter No. 03-03-06/1/239, dated 4/14/09.

If a taxpayer is not a permanent resident of the Russian Federation, the income received in the form of allocated property during the liquidation is subject to taxation. This tax obligation falls on the source of the disbursements in Russia, and affects any amounts exceeding the foreign member’s contribution to the capital of the organization.

The responsibility for calculating, deducting, and transferring the profit tax into the budget from the income of the foreign company is entrusted to the tax agent. The tax on this type of income is 20%, as stated in in Section 1, Paragraph 2 of Article 284 of the Tax Code, which is equal to 20%.

Translated by Alinga Consulting Group.

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