Elimination of Economic Double Taxation of Dividends

The subject of the study is the mechanism for eliminating economic double taxation from participation in subsidiaries operating in the tax systems of the EU, G20 and the Russian Federation.

The purpose of the work is to diagnose this mechanism and develop directions for its improvement in Russia based on the use of best practices of foreign countries in order to increase the investment attractiveness of Russia. The article reveals theoretical approaches to the exclusion of economic double taxation, examines the content of the mechanism of exemption from tax of dividends received by parent companies — participants (shareholders), and also substantiates the importance of the mechanism of elimination of economic double taxation to attract investment in our country. The experience of the EU, G20 and Russia countries on the leveling of economic double taxation is systematized and generalized, and the rules for exemption from income tax on dividends are also given, for the analysis of which their decomposition and grouping by individual essential features based on the use of induction and deduction methods. Based on the results of the study, measures are proposed to improve the existing procedure for granting income tax benefits in respect of dividends received by a Russian participant (shareholder), including instruments that have successfully proven themselves in foreign jurisdictions.

The conclusion is made that structurally the Russian mechanism of elimination of economic double taxation fully corresponds to the best examples of international practice. Positively assessing the practice of applying the dividend benefit based on the minimum threshold of strategic participation, it is justified that this criterion of the materiality of investments should be supplemented by other criteria. The development of the mechanism for eliminating economic double taxation in Russia is seen in lowering the threshold of minimum participation to 10% and developing other criteria for applying the exemption of dividends, such as the condition for reinvesting the funds received into the Russian economy for a certain period of time. 

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