Tax developments you should be aware of in Quarter 2

In this newsletter we inform you about the latest tax developments important for your business in Russia:

  • The Supreme Court sets the rules for the game, regarding:
    • Transfer pricing
    • Thin capitalization
    • Unreasonable tax benefit
  • Receiving income from Russia? Please don’t forget to check your beneficial ownership
  • Suppliers check – the issue of tax underpayment was raised in court
  • Expected implementation of VAT for foreign online stores
The Supreme Court sets the rules for the game

The Supreme Court, the highest court in Russia, summaries the decisions about procedural issues related to interaction between the tax authorities and tax payers. The overview encloses general description of main conclusions related to transfer pricing control, thin capitalization rules and other compliance procedures application.

Receiving income from Russia? Please don’t forget to check your beneficial ownership right

Recent court cases allow determining factors which put under risk reduced tax rates application under Double Tax Treaty when receiving dividends, royalties or intercompany loan interest from Russia.

We show which factors can be treated as positive and which ones as negative factors.

Suppliers check – the issue of tax underpayment was raised in court

When the tax authorities concluded the taxpayer’s supplier is not capable to perform services – the related taxpayers’ expenses for corporate tax purposes and input VAT for VAT purposes were rejected.

Despite the fact that the contractor does not have resources, the deal cannot be considered as mock if it was de facto completed and customer followed the rules of due discretion choosing the contactor.

Expected implementation of VAT for foreign online stores

Following recent introduction of VAT on electronic service suppliers new draft law to implement VAT on e-commerce goods supplies to Russia by foreign online stores is expected early May this year. The amount of tax rate is to be 15,25%.

It is important to mention that the law will provide for some special measures of control for companies avoiding VAT payment, for example, Roskomnadzor will have right to block web page of the store, and the company will be penalized in amount of 20% from the total sum of assessed VAT.

We will continue to follow the developments and keep you updated of this draft law progress.

For more information please contact:

Alex Stolarsky
Rechtsanwalt, Director for Legal, Compliance & Tax, Member of the Board
StolarskyA@schneider-group.com

Sergey Leoshko
Tax Team Leader
LeoshkoSV@schneider-group.com

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