July
2009
The experts of Vegas Lex Tax Group enlighten the readers of the international Legal500 directory on the Russian thin capitalization practices
A reputable legal directory Legal 500 has published an article of Vegas Lex experts on the application of thin capitalization rules in Russia. The article was authored by Stepan Guzey, Senior Attorney of the Tax Group, and Tax Expert Andrey Tsib.
The issues concerning legality of deduction of interest on loans and other borrowings for income tax purposes have become especially vital in the economic crisis environment. The special rules (thin capitalization rules) with respect to such expenses incurred by companies for servicing their debts were introduced in Russia in 2002 and based, without limitation, on international experience. Said rules are of great consequence also for foreign investors and company participants (shareholders) in terms of re/investment of business in view of the Double Tax Treaties. For more details on the issue please see “Thin Capitalization – International Experience and Russian Practice” at Legal500.