The Finance Ministry (MoF) has issued a letter No. 03-03-06/2/21011 on 13th April 2016 describing the tax treatment of interim dividends paid by a Russian company to its company shareholders in an amount exceeding the net profits of the company in the corresponding year. In accordance with article 28 of the Federal Law No. 14-FZ on limited liability companies, the MoF stated that a company has the right to make decisions on how it distributes (quarterly, biannually, or annually) its net profits to its shareholders. The MoF explained that in a case where the amount of distributed interim dividends is greater than the amount of the net profits of the company in the particular year, the difference should be considered as income of the company’s shareholders subject to a 20% corporate income tax rate.
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