In Letter #03-03-06/1/134 from March 15, 2010, the Ministry of Finance explains the tax procedure for dividends distributed by an organization to a non-resident of Russia.
The letter notes that the amount of tax to be withheld from the income of taxpayers receiving dividends is paid by the tax agent according to the following equation:
T = K x Rt x (d – D)
Where: “T” is the amount of tax to be withheld from the income of taxpayers; “K” is the ratio of dividends distributed to the taxpayer to the total dividends distributed by a tax agent; “Rt” is the corresponding tax rate; “d” is the total amount of dividends to be distributed by a tax agent for all dividend recipients; and “D” is the total amount of dividends received by a tax agent that have not been addressed previously for the current or preceding tax periods at the time of the distribution of dividends. This formula does not include dividends received by Russian organizations or tax residents mentioned in Subparagraph 1, Point 3, Article 284 of the Tax Code. The tax base is determined in respect to income received by the tax agent in the form of dividends.
According to Point 3 in Article 275 of the Tax Code, in the event that a Russian organization—the tax agent—pays out dividends to a non-resident or foreign organization, the tax base of the taxpayer who received the dividends on each payment is defined as the sum of the distributed dividends. Subparagraph 3, Point 3, Article 284 or Point 3, Article 224 of the Tax Code sets the rate of tax accordingly.
Thus, the above figure “D” has nothing to do with calculating income tax for a non-resident of Russia.