Russian Ministry of Finance has published a letter no. 03-03-06/4/44331 which was issued on 23 October, 2013. This explains if corporate withheld tax by a Bulgarian branch belongs to a Russian company may be benefited against the corporate tax accountability in Russia.In accordance with article 23 of the Bulgaria–Russia Income and Capital Tax Treaty (1993), Russia must allow income tax deduction from Russian citizen, an amount equal to the income tax paid in Bulgaria though a resident of Russia derives income according to the provisions of the tax treaty, may be taxed in Bulgaria.
On the basis of article 7 of tax treaty, the Ministry of Finance noticed that the profits of a Russian enterprise may only be taxed in Bulgaria if a permanent establishment is initiated in Bulgaria.At last, the company tax cannot be benefited in Russia whether corporate income tax was withheld in Bulgaria in a nature not likewise tax treaty.
