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The global drive towards decarbonization of the global economy plays an increasingly significant role in Russia’s strategy for development of its energy and other carbon intensive industries. It has its own renewables, energy efficiency and environmental programs, develops national carbon laws and has major plans for hydrogen. In particular, Russia intends…

New amendments to the Russian Tax Code1 (“Law”) will allow individuals to reduce the Russian individual income tax on profit distributions from foreign companies and unincorporated vehicles (e.g., trusts) sourced from dividends originally paid by Russian companies that are subject to Russian withholding tax (“indirect tax credit”).

The Law eliminates the existing double taxation and economically equates ownership of Russian assets via Russian and foreign companies (trusts). At the same time, the Law eliminates the 0% tax rate previously available for Russian companies on dividends received through intermediary foreign companies that are not beneficial owners of income. This will allow, for example, the application of the 15% Russian withholding tax rate on dividends paid to Cypriot and Luxembourg intermediary companies under the recently amended tax treaties. Some historic holding structures will get a deferral; for them the new rules will apply as of 2024.