Prior to the entry into force of the DBA, companies operating in Hong Kong but listed in Russia were subject to income tax in both jurisdictions. In some cases, the taxation of the repatriated profits of a Hong Kong company based in Russia would be determined individually by the tax authorities, depending on the source of income. Foreign investors who operate businesses in Russia and would like further information to avoid double taxation can contact our lawyers in Russia. Most Russian double taxation treaties provide for the following mechanisms to avoid double taxation: there are, however, several countries that have tax agreements with Russia that leave these interest payments unpaid (or have a very low withholding tax rate), thus eliminating the potential for double taxation. However, Russia is in the process of amending some of these treaties. Under the agreement, withholding tax on dividends in Russia for qualified Hong Kong companies is now taxed at less than 5% or 10% as non-contractual companies, depending on the participation of the dividend recipient. The agreement also provides for a Russian withholding tax of zero percent on interest and a cap of 3 percent on Russian withholding tax on royalties. Together, these provisions represent a 17% reduction in the exempt tax rate. A detailed comparison of Russia`s withholding tax rates for Hong Kong residents before and after the agreement is described below: since 2002, when the new Income Tax Law entered into force, it has changed the tax system applicable to foreign companies operating in Russia. The old, highly bureaucratic procedure is now being replaced by a very simplified procedure that allows investors to use the double taxation treaties that Russia has signed over the years with different countries more quickly.
In his 11th appearance, Overchuk also noticed that Russia could offer to change tax deals with Switzerland and Hong Kong. Elimination of double taxation: Russia has chosen the tax deduction method as it currently is (the same as in most SDRs with Russia). In the absence of a tax agreement, Russia imposes a withholding tax of 15% on cross-border dividends and a withholding tax of 20% on cross-border interest payments and royalties. If a Nigerian-based company (which does not have a tax deal with Russia) has a subsidiary in Russia and the Nigerian company lends to its Russian subsidiary, interest payments to the parent company in Nigeria would face a 20% withholding tax vis-à-vis the Russian government. If savings income is also taxed in Nigeria (and there is no foreign tax credit for tax paid to Russia), the result would be double taxation and a higher cost for the Nigerian company to invest in Russia. The role of double taxation treaties is to control how profits are taxed in different countries. Agreement between the Government of the Russian Federation and the Government of the Republic of Albania for the avoidance of double taxation of taxes on income and capital The United States and Russia have concluded a tax treaty. . . .