BGP Litigation senior associate Denis Savin speaks with Interfax about the failed attempt by tax officials to make OJSC Ilyushin Finance Co. pay 10% tax on dividends transferred to Cyprus (Starberry Limited) instead of the reduced 5%

"Similar claims have been brought against companies before, but as a rule they didn't have strong prospects of success in court, except in cases where the Cypriot company turned out to be a conduit and acted as a nominee investor in order to obtain an unjustified tax benefit on account of the lower tax rate, explains Denis Savin, senior associate at BGP Litigation".

"For foreign investors who plan to avail themselves of the lower rate of tax on dividends it is advisable when making investments to approach the legal structuring of the transaction with care and to use the simplest and clearest form possible. This should help avoid unjustified tax claims further down the line, says D. Savin".