Russia Court Issues Decision on Exchange Rate Requirements for Withholding Tax on Foreign Currency Distributions

The Russia Arbitration Court of Khabarovsk Krai recently issued a decision on the exchange rate to be applied in determining the correct amount of withholding tax on foreign-currency dividend distributions. The case involved a Russian company that distributed dividends in U.S. dollars to its shareholder in Cyprus. At the time of the distributions, which took place in 2016, the Russian company withheld tax at the rate of 5% as per the 1998 Cyprus-Russia tax treaty. However, the tax authority d…