The Ministry of Finance proposed to increase the tax on dividends for non-residents from “C” accounts to 35 percent
Quick Look
The Russian Ministry of Finance has proposed increasing the income tax rate on dividends for non-residents from unfriendly countries holding type “C” accounts from 15 to 35 percent as part of the new budget package.
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Why It Matters
Type “C” accounts were introduced by decree of the President of the Russian Federation dated March 5, 2022 to limit transactions with non-residents from unfriendly countries.
As part of the budget package submitted to the government, the Russian Ministry of Finance initiated an increase in the income tax rate on dividends paid in favor of non-residents to “C” accounts to 35 percent. This is stated in a message on the department's website.
We are talking about individuals and legal entities who own shares in Russian companies, who are residents of unfriendly states and are seriously limited in the right to dispose of their funds. Type “C” accounts were introduced by decree of the country’s President Vladimir Putin dated March 5, 2022.
The current tax legislation provides for them a tax rate of 15 percent on a general basis. If the initiative passes, then more than a third of the dividend income of such non-residents will immediately go to the budget, since taxes for them are calculated and paid by the Russian company.
What to Watch
AI outlook — possibilities, not facts
Increasing the tax rate on dividends to 35 percent
Likely · Within months
Open Questions
- Will the amendments be adopted in the current budget cycle?
