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Foreign Currency Losses On Interest Paid With Dividends Do Not Change Tax Rate


The Ministry of Finance has spelled out the taxation procedure for foreign currency losses stemming from the use of dividends to pay interest in debt-to-equity swaps. 

The Ministry notes that, based on paragraph 4 of Article 269 of the Tax Code (TC) of the Russian Federation, interest does not lower the profit tax base, but instead is taxed in accordance with paragraph 3 of Article 284 of the TC.

Therefore, foreign currency loses of this type not taken into account for tax purposes.

This is according to Letter of the Ministry of Finance # 03-03-06/1/91 from February 11, 2011.

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