Russia Tax Agency Clarifies Tax Treatment of Debt Forgiveness by Foreign Entities

The Russian Federal Tax Service July 19 clarified the tax treatment of the income generated when foreign entities forgive the debts of Russian taxpayers. The tax agency clarified that: 1) the debt of a Russian taxpayer, including the principal debt and accrued but unpaid interest, which is forgiven by a foreign entity under a loan agreement concluded or a claim assigned to the foreign entity before March 1, isn’t included in the taxable income of the Russian taxpayer in the calculation of corporate income tax; and 2) debts forgiven for Russian taxpayers don’t amount to taxable income for the foreign ...