The Russian Ministry of Finance has issued clarifications on the procedure for determining the tax base for profit tax on the sale of shares or stakes.

The main point: a taxpayer has the right to reduce the income from the sale of a share not only by its acquisition cost but also by the amount of a previously made contribution to the organization's assets (in cash).

However, there is a caveat: the contribution to assets is not taken into account when determining the loss. That is, if the acquisition cost of the share is higher than the sale price, the difference is recognized as a loss.

However, if the sale price is higher than the acquisition cost, you can offset this gain by contributing to assets, but only up to the point of reducing the tax base to zero.

Conclusion:

When structuring business exit (M&A) transactions, lawyers and tax advisors should obtain documents confirming the monetary contribution to assets in advance. This is a legal tool for reducing the tax burden when selling profitable assets.