The new profits tax law which came into force in 2002 significantly changed the withholding tax regime applying to Russian source income paid to foreign companies without a permanent establishment in Russia. The new withholding tax regime is now much closer to OECD principles and the previously extremely bureaucratic procedure for obtaining advance treaty clearances has been much simplified.
Tax treaties to which the former USSR was party are honored by Russia, unless the other party to the treaty has renounced it or it has been replaced by a new treaty. In the last few years Russia has entered into many new treaties based on the OECD Model Convention.
A foreign company claiming an exemption from Russian withholding tax based on a treaty must obtain and provide to the Russian payor a confirmation from the foreign tax authority that the company is tax resident in the relevant treaty country. The tax authorities have clarified the information, which is necessary to confirm the eligibility of the foreign company to the treaty exemption in such a certificate.