Russia Reduces Key Interest Rate to 11% Impacting Controlled Debt Rules and Interest Penalties

The Russian Central Bank has announced its decision to reduce the key rate from 14.0% to 11.0% with effect from 27 May 2022. For tax purposes, the key rate is important in relation to the safe harbor rates for interest income and expense on controlled debt. For ruble-denominated loans, the standard safe harbor rates range from 75% to 125% of the key rate. However, the upper range has been temporarily increased to 180% for the period 1 January 2020 to 31 December 23, and for ruble-denominated…