"We should revise the taxation of dividends, considering that Russia has a unique opportunity to create holdings," he said.
He recalled that Russia has about 80 agreements with various countries on avoiding double taxation. We should make use of this to create attractive conditions for instituting holdings in Russia.
Last week the president in his budget address set the task of revising the taxation of Russian legal entities' dividends on investments in subsidiaries. In most countries, taxes are not imposed on such dividends, whereas in Russia such dividends are subject to taxation.
At the same time, Shatalov noted that to abolish this tax, a whole number of issues, including transfer pricing and tax residence for legal entities, must be solved. An institution of foreign controllable companies should be created, he said. "These are serious, ambitious projects, however, we must start working on them," he added.
The Finance Ministry continues drafting a bill on transfer pricing and is doing this in cooperation with businessmen, Shatalov said. He named the main principles on which transfer pricing should be based. "Transactions must be carried out at a just, market price, while taxpayers should know the risky points where claims may be laid to him. The list of these claims should be definite and formalized, while the procedure should be transparent and understandable," Shatalov said.
