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and practices in Russia

Question: Regarding the accounting of dividends from a Russian organization in determining the maximum amount of CFC profits for income tax purposes.

Answer:

The Department of Tax and Customs Policy considered a letter on the application of certain provisions of the Russian Federation legislation on taxes and fees in terms of taxation of profits of controlled foreign companies and reports. The profit (loss) of a controlled foreign company in accordance with the first paragraph of clause 1 of Article 25.15 of the Tax Code of the Russian Federation (hereinafter - the Code) is recognized as the amount of profit (loss) of this company, calculated in accordance with Article 309.1 of the Code.

If the amount of profit of a controlled foreign company calculated in accordance with Article 309.1 of the Code is more than 10,000,000 rubles, then, on the basis of clause 7 of Article 25.15 of the Code, the profit of the controlled foreign company is taken into account when determining the tax base for the tax period for the corresponding tax.

In order to apply this clause, the amount of profit of a controlled foreign company in 2015 is 50,000,000 rubles, in 2016, is 30,000,000 rubles according to the transitional provisions established by clause 2 of article 3 of the Federal Law of 24 November 2014 N 376-FZ "On Amendments in the First and Second Parts of the Tax Code of the Russian Federation (in terms of taxation of profits of controlled foreign companies and incomes of foreign organizations)".

On the basis of the third paragraph of clause 1 of Article 25.15 of the Code, incomes in the form of dividends, which are paid by Russian organizations, are not taken into account when determining the profit of a controlled foreign company if the controlling person of this controlled foreign company has a de facto right to such income subject to the provisions of article 312 of the Code.

Therefore, in the case when the profit of a controlled foreign company includes the amount of dividends stipulated by paragraph three of clause 1 of Article 25.15 of the Code, and considering that the amount of profit (loss) of the controlled foreign company is calculated in accordance with Article 309.1 of the Code, then, in opinion of the Department, the amount of such dividends does not reduce the amount of profit of a controlled foreign company for the purpose of applying the thresholds established by clause 7 of Article 25.15 of the Code.

16 January 2017