Extension of the income tax benefit for the forgiveness of foreign loans

Federal Law No. 389-FZ from July 31, 2023 introduced a number of amendments to the Russian Tax Code.

As a result, the long-awaited benefit for forgiven foreign debts was extended. The period of validity of the income tax exemption for forgiveness of debt by a foreign creditor has been extended until the end of 2023[1].

According to the original version of the Tax Code, in 2022 the taxpayer had the right not to take into account for taxation purposes income from the forgiveness of obligations under a loan (credit) agreement, the lender (creditor) under which as of March 1, 2022 was a foreign organization (foreign citizen).

Contracts for the sale and purchase of shares and stakes in Russian organizations were added to the list of obligations for which the profit exemption is applicable, subject to certain conditions: the contract was concluded after March 1, 2022; the seller is a foreign person; the decision to forgive the debt was made before December 31, 2023.

[1] subpar. 21.5, par.1, Art. 251, subpar. 2.1, par. 1, Art. 268 of the Russian Tax Code