Double taxation and CFC rules: the Russian shareholder's taxes on a project in the region

What is happening

A Mexican subsidiary is about to pay its first dividends to Russia. The local accountant asks for proof of residence, and the owners want to know what the withholding tax will be.

A Russian IT company provides services to a client in Colombia, and the client withholds tax from payments even though the contract was silent on this. The company needs to decide what to do now and what to provide for in future contracts.

Founders own a Chilean company together with two other Russian partners, each holding less than 25%. They are unsure whether they qualify as controlling persons.

What the law says

• According to the Russian Ministry of Finance's information on the status of double tax treaties as of 14 July 2026, treaties in the region are in force with Argentina (applied from 1 January 2013), Brazil (from 1 January 2018), Venezuela (from 1 January 2010), Cuba (from 1 January 2011), Mexico (from 1 January 2009), Chile (from 1 January 2013) and Ecuador (from 1 January 2019). There are no treaties with Colombia, Peru, Nicaragua or Bolivia.
• Presidential Decree No. 585 of 8 August 2023 on the Suspension by the Russian Federation of Certain Provisions of International Tax Treaties did not affect the treaties with Latin American countries.
• The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) applies to the treaties with Mexico (from 1 January 2025) and Chile (withholding taxes from 1 January 2022, other taxes from 1 January 2023). It adds a principal purpose test: relief may be denied if obtaining it was one of the principal purposes of the arrangement.
• A Russian company holding more than 10% in a foreign organisation must notify the tax authority within three months of acquiring or changing the stake (Article 23(3.1)(1) and Article 25.14(3) of the Russian Tax Code).
• A controlling person is a shareholder with more than 25%, or more than 10% where Russian residents together hold more than 50% (Article 25.13(3) of the Tax Code). A CFC notification is due by 20 March for organisations and by 30 April for individuals, of the year following the period in which the CFC's profit is recognised (Article 25.14(2) of the Tax Code).
• The conditions for exempting CFC profit from Russian tax are set by Article 25.13-1 of the Tax Code, and liability for failing to file CFC notifications by Article 129.6.

What we do

• We establish whether a treaty exists with the country and which article applies to the income: dividends, interest, royalties or services.
• We give a withholding rate only after reading the treaty text, taking the MLI into account for Mexico and Chile.
• We obtain a certificate of Russian tax residence through the taxpayer's online account with the Federal Tax Service (FNS) and check with a local specialist in what form the withholding agent will accept it.
• We calculate interests along the ownership chain and determine which Russian shareholders qualify as controlling persons.
• We check whether the CFC's profit can be exempt from Russian tax under Article 25.13-1 of the Tax Code.
• We prepare notifications of foreign shareholdings and CFCs and put their deadlines in a calendar.
• We build tax terms into contracts with local customers and contractors; local bookkeeping and filings are done by an accountant in the country, and oversight of their work is a separate service within this practice.

What we will need from you

• An ownership chart with all shareholders' interests, including individuals.
• Contracts under which payments from the region are made or planned.
• The foreign company's financial statements, if it is already operating.
• Details of tax withheld at source and correspondence with the local accountant.