The lower chamber of the parliament has passed in the third reading the draft Federal Law No. 724609-6 amending the thin capitalization rules on 29th January 2016, which was submitted to the lower chamber of the parliament on 14th December 2015. It contains interest on loans from banks and Russian companies will not be subject to the thin capitalization rules, under certain conditions. The draft law also spreads the opportunity of the thin capitalization rules to include loans from foreign related parties that do not hold a direct or indirect interest in a Russian borrower and the interest expenses that are not deductible for corporate income tax purposes on the basis of thin capitalization rules, qualify as dividends and are taxed accordingly. The draft law is estimated to be entered into force on 1st January 2017, excluding for bank loans that has already exempted from January 1, 2016 and hope it is to be approved by the upper chamber and signed by the president.
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