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06.11.2025
COULD TAXES PAID AT THE PLACE OF REGISTRATION OF FOREIGN BRANCHES BE RECOGNISED AS EXPENSES?
Expenses in the form of taxes (including indirect taxes) paid in another country in accordance with its laws can be included by a Russian company when determining the tax base as part of other expenses.
However, while taxes paid abroad can be offset against the corresponding tax in Russia to avoid double taxation, they cannot be included as expenses. For example, income tax paid by a Russian organisation in a foreign country can be offset under Article 311 of the Tax Code of the Russian Federation. Special provisions of Article 386.1 of the Tax Code also provide for a deduction for property tax of organisations.
It is noted that paid foreign taxes can also be included as expenses if the company receives a subsidy from the Russian budget for paying taxes. In this case, the subsidy is recognised as non-operating income, and the paid foreign taxes are recognised as other expenses.
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