On 16 July, the Ministry of Finance of the Russian Federation (the “Ministry”) reminded taxpayers that as of 1 January 2011, a new version of the Tax Code of the Russian Federation (article 284) came in to force. Specifically, as of 1 January 2011, in order to apply the zero tax rate to dividends, an organisation that obtains dividends is no longer required to comply with the requirement to meet the purchase price of the contribution to the charter capital of the organisation that pays the interest.
At the same time, the Ministry emphasised that an important condition of paying dividends is that an organisation must turn a profit. The Ministry concluded that the zero tax rate in 2011 applies to dividends paid from 2010 net profits; therefore, if an organisation has no 2010 net profit, and dividends are paid from the undistributed profit of previous years, then said organisation may not apply the zero tax rate to these dividends.
Therefore, companies should keep in mind that they may apply the zero tax rate to dividends only if said dividends are paid from a respective company’s profits for the previous year.
[Letter No. ЕD-4-3/11628@ of the Federal Tax Service of the Russian Federation “On replacing Letter No. ED-4-3/10420@ of the Federal Tax Service of the Russian Federation, dated 26 June 2012”, dated 16 July 2012]