Unlike other types of passive income, dividends are formed directly from the profit of a legal entity and thus, theoretically, can be taxed twice at the level of the company and the income recipient. Such disproportion in the conditions of economic activity creates several types of economic distortions, although tax conditions should not influence the economic agents’ decisions. The need to eliminate the disproportions determines the relevance of the topic, and the approach to its development determines the scientific novelty of this study. Thus, the goal of the work is to develop proposals for the harmonization of the taxation regime in the payment of dividends at the level of the company and its participants, including taking into account the problem of double taxation. In order to achieve this goal, the authors set the tasks that involve identifying the current features of the Russian tax legislation in terms of taxation on dividends, generalizing the relevant foreign experience, assessing the economic and fiscal consequences of different scenarios for reforming the current dividend taxation mechanism, and developing specific recommendations aimed at its improvement. The methodological basis of the study consisted of the following methods of scientific knowledge: historical and logical, statistical, induction and deduction, comparative analysis, synthesis, modeling, analogy, econometric, comparative legal. Based on the findings of the study, the authors made conclusions that economic distortions arising from double economic taxation when distributing profits in the form of dividends are characteristic of the Russian tax system; this is indicated, in particular, by the presence of 'debt bias' in the financing of Russian private companies, as well as the parallel existence of different taxation principles of capital gains and other income other than dividends (interest and licensing payments). The authors' recommendations present an interrelated system of measures aimed at improving the current model of dividend taxation, including a consideration of the new socio-economic challenges facing the Russian economy. The paper substantiates the expediency of transition to partial exemption of dividends from taxation at the individual level through harmonization of the dividends taxation regime with the system of capital gains taxation. In order to harmonize the rules of dividends taxation with the mechanism of controlled foreign companies, it is also justified to reduce the threshold of “substantial participation in the capital” to 25% while using a zero-profit tax rate for dividends received. The authors also justify the implementation of the “allowance for corporate equity” mechanism in the tax law, which would align the dividends and interest taxation principles and become an investment incentive to attract new equity capital for taxpayers. Prospects of research within the framework of this topic are related to the development of economic and legal signs indicating the payment of 'hidden dividends' by
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