Proposed Russian LPN tax could derail Eurobond train

31 Jan 2012

A new withholding tax suggested by Russia's deputy finance minister Sergei Shatalov in a letter to the Russian Federal Tax Service could make Eurobond issuance much less attractive to Russian companies.

The suggestion involves a 20% withholding tax levied on interest payments on Russian Eurobonds issued via SPVs registered in foreign jurisdictions.

The proposal, reported by local media and now the subject of discussion among analysts, would hit the loan participation note structure, which uses such an SPV to take ...

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