Amendments to NSD’s Internal Regulations 01/01/2016 (regarding taxation of income paid on Russian securities)

Attn.: Foreign nominees

Please note the following information regarding taxation of income paid on Russian securities:

1. In accordance with the amendments made to the Russian Tax Code by Federal Law No. 362-FZ dated 28 November 2015, the contractual relationships between NSD and foreign nominees have been changed as follows:
   • 1.1. The amendments made to the Regulations on the Procedure for Performance of Withholding Agent Functions under the Russian Tax Code (the “Regulations”) are intended to simplify the rules of Tax Disclosure where no tax exemptions of reduced tax rates are claimed from the withholding agent. In such cases:
     • It is not required to disclose the ultimate beneficial owner of income in a summary Tax Disclosure statement; persons authorized to exercise the rights attached to the relevant securities (or persons on whose behalf such rights are exercisable) shall be disclosed in aggregate form;
     • In a summary Tax Disclosure statement, it is not required to include a reference to the provisions of the Russian Tax Code or DTT, if a standard tax rate under the Russian Tax Code is claimed.
   • 1.2. In addition, specific provisions have been added to the Regulations to describe taxation of Russian organizations on interest income payable on Russian bonds. The withholding agent will neither calculate, nor withhold tax on interest income where, in a summary Tax Disclosure statement, each Russian organization is disclosed separately and its Russian Taxpayer Identification Number (TIN) is specified (article 310.1, clause 9, paragraph 3 of the Russian Tax Code). In this case, any such Russian organization shall be required to add the interest income to its tax base and pay income tax on the interest amount received.
     
     In this case, IT IS NOT REQUIRED to include a reference (3101, 9, 3) to the provisions of the Russian Tax Code.
     
     Below is an example of a Russian organization disclosure for Russian bonds to claim tax exemption at the source of payment:
     

     1

     RU

     Russian Federation TIN:7702165310

     Legal entity (310)

     15,000

     0%

     
     Where no Russian TIN is specified in a Tax Disclosure statement, the withholding agent will apply the standard tax rate of 20% applicable to Russian companies.
2. A reference to the amended Regulations has been posted in the ‘Tax Management’ section (under ‘Russian securities / Foreign nominees’).
3. Early in 2016, the relevant appendices available in the ‘Tax Management’ section will be updated.