On 26 July 2019, the Russian Central Bank announced the decision to reduce the key rate from 7.50% to 7.25% with effect from 29 July 2019.
For tax purposes, the key rate is important in relation to the safe harbor rates for interest income and expense on controlled debt. For ruble-denominated loans, the safe harbor rates range from 75% to 125% of the key rate. For loans denominated in other currencies, the safe harbor rate range is based on EURIBOR, SHIBOR, or LIBOR, depending on the currency.
The key rate has an effect on the interest penalties, which increase together with the increased interest rates. For corporate taxpayers, the interest penalty is equal to 1/300 of the key rate per day of delay where the delay does not exceed 30 calendar days. Where the delay exceeds 30 days, the interest penalty is equal to 1/150 of the key rate beginning from the 31st day of delay.
