Russia's Finance Ministry proposes 35% tax on dividends to unfriendly non-residents

September 24, 2026 at 05:01 PM2 min

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Russia's Finance Ministry has proposed raising the profit tax on dividends paid to non-residents from unfriendly countries on type 'C' accounts to 35 percent. The measure is part of a budget package submitted to the government. The ministry also proposes a 22 percent VAT on cross-border online trade and higher taxes on passive income.

Key Facts

The proposed tax rate on dividends to non-residents from unfriendly countries on type 'C' accounts is 35 percent, up from the current 15 percent.
Type 'C' accounts were introduced by President Vladimir Putin's decree of March 5, 2022.
The Ministry of Finance also proposes a 22 percent VAT on cross-border online trade.
The ministry proposes merging basic and passive income for progressive taxation, affecting no more than 6 percent of citizens (up to 4 million people).
If approved, the progressive scale for passive income could take effect by 2029.

Dividend Tax Increase

The Russian Ministry of Finance has initiated an increase in the profit tax rate on dividends paid to non-residents from unfriendly countries on type 'C' accounts to 35 percent. The measure applies to individuals and legal entities holding shares in Russian companies who are residents of unfriendly states and are restricted in disposing of their funds. Type 'C' accounts were introduced by President Vladimir Putin's decree of March 5, 2022. Current legislation provides for a 15 percent tax rate on such dividends on general grounds. If the initiative is approved, more than a third of dividend income of such non-residents will be directed to the budget immediately, as Russian companies calculate and pay taxes on their behalf.

Budget Package Measures

In the same budget package, the Ministry of Finance proposes introducing a value-added tax (VAT) on cross-border online trade at the maximum rate of 22 percent. The ministry also proposes revising rates for so-called passive income upward and reinstating a windfall tax for certain sectors of the economy. Currently, dividends, income from savings accounts, proceeds from property sales, and securities transactions are taxed at fixed rates of 13 percent and 15 percent. The ministry proposes merging basic and passive income and applying a dynamic progressive scale to the combined amount. Only amounts exceeding the threshold rate would continue to be paid to the state treasury.

Progressive Taxation Impact

The Ministry of Finance estimates that the change will affect at most 6 percent of citizens, no more than 4 million people. If the idea is approved, the progressive scale will reach passive income by 2029. Basic income has been taxed under a progressive five-tier scale since 2025.