Yet care needs to be taken where treaties are written in different languages, especially if both versions have equal force. The English text refers only to assets. In some instances tax authorities are reluctant to give advance confirmation of a double tax treaty, for example, when the investor sells Russian shares but not through a licensed broker. In such cases Russian tax is withheld and, in theory, refunded at a later date but refund claims are often rejected. Moreover, if tax is withheld and paid to the tax authorities in dollars, the refund is only granted in rubles at the exchange rate on the date of withholding, thus, exposing the investor to ruble devaluation risk.
Location is one important factor.
In some regions, manufacturers with foreign shareholders are entitled to local tax concessions and the law on introduction of part II of the Tax Code confirms the availability of local profits tax concessions. However, it still remains to be seen what position authorities will actually adopt, as they still have grounds to challenge concessions on the basis that they are not in accordance with part I of the Tax Code. To summarize, whilst many Russian tax issues may be avoided by thoughtful structuring of investments, investors cannot rely blindly on the availability of regional and treaty benefits since there are cases where the courts or Russian administrative procedures render these benefits redundant. Moreover, currency control considerations still play a significant role in the effective structuring of transactions.