On 9 October 2007, the Russian Ministry of Finance issued its clarification regarding the application of Art. 7(3) of tax treaties regarding the deduction of expenses incurred for the purposes of the permanent establishment of a foreign entity located in Russia. In its clarification, the Ministry referred to Art. 7(3) of the tax treaty between Russia and the United Kingdom, which allows the deduction of expenses incurred for the purposes of the PE, including a reasonable allocation of executive and general administrative expenses, whether in Russia or elsewhere. The issue was whether professional indemnity insurance expenses fall within the scope...