The Russian Ministry of Finance has issued guidance letter No. 03-03-06/1/87340 on the interaction between the country's thin capitalization rules and a tax treaty. Under the thin cap rules, the maximum amount of deductible interest expense on controlled debt is limited to the debt not exceeding a debt-to-equity ratio of 3:1 as determined on the last day of the reporting tax period (12.5:1 for banks and leasing companies). Any excess amount is treated as a deemed dividend for which…