Income of foreign entities from sources in the Russian Federation may be subject to a tax withheld at the source of income. In international practice, the tax is called withholding tax (WHT).

Article 309.1 of the Russian Tax Code lists the types of a foreign entity’s income subject to taxation in Russia. Withholding tax is calculated, withheld and remitted by a tax agent. In most cases, a tax agent is a Russian legal entity (less often — a Russian individual entrepreneur or a permanent establishment of a foreign entity).

Withholding tax is a tax on income from a source in Russia that is withheld by a tax agent (usually a Russian legal entity) when paying income to a foreign entity.

Information on income paid and tax withheld at source should be included in a special tax report, i.e., the tax calculation of amounts paid to foreign entities and taxes withheld ("tax calculation"). The tax calculation should be prepared even for income which is not subject to withholding tax.