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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