A decision was made to soften the terms of payment of dividends to foreigners

On August 23, 2023, the extracts from the minutes of the meeting of the Sub-commission of the Government Commission for Control over Foreign Investments in the Russian Federation No. 182/5 dated August 09, 2023, were published. (“Extracts No. 182/5”).

The said Extracts No. 182/5 show that the Russian Ministry of Finance and the Bank of Russia have decided to ease the previously established restrictions on payment of dividends to foreign persons provided they make investments in the Russian economy.

Under the terms of the Extracts No. 182/5, the payment of dividends (distribution of profits) to foreign persons can be carried out without any restrictions, but its volume may not exceed the amount of investments made by such persons in Russia. In addition, one of the prerequisites for payment of dividends is that foreign creditors make investments in the Russian economy after April 01, 2023, including expansion of production volumes in Russia and development of new technologies.

Previously, the dividend payment could not exceed 50% of the total net profit for the previous year provided that the certain set KPIs have been fulfilled.

The full version of Extracts No. 182/5 could be found on the website of the Ministry of Finance (in Russian only) with translation attached1.

You can read the translation of the Extract by clicking here.