Russia Clarifies Withholding When Russian Source Income is Attributed to a Permanent Establishment

The Russian Ministry of Finance recently published a guidance letter concerning Russian source income paid by a Russian entity in relation to a permanent establishment in Russia of a foreign entity.

The letter provides that if the business activities of a foreign entity create a permanent establishment in Russia under the Russian Tax Code or an applicable tax treaty, the taxable income generated by the permanent establishment is determined taking into account the functions performed in Russ…