The Government and the Federal Tax Service of the Russian Federation Have Presented a Strategy for “Whitening” the Russian Economy

The Government and the Federal Tax Service (FNS) of the RF have presented a strategy for ‘whitening’ (formalizing) the Russian economy in the near future.

On 30 March, Bill No. 1191451-8 was introduced to the State Duma, providing for:

• Control of market prices when importing goods from the EAEU to Russia
• Information exchange between the FNS and banks when transferring funds to bank accounts.

Amendments to the Tax Code are planned to introduce a new Article 54.2 of the RF TC. The FNS will oversee transactions involving the import of goods from the EAEU to Russia by taxpayers subject to mandatory marking or traceability on a list defined by the Government, as well as the sale of such goods by the taxpayer.

For VAT purposes, the price of such goods must correspond to the market price, i.e., fall within the market price range determined pursuant to cl. 3 art. 105.9 of the RF TC, based on comparable transactions (art. 105.5 of the RF TC), considering the specifics approved by the RF Government.

The new rules will apply to all transactions specified above, including those with independent entities. Monitoring will be carried out during desk and on-site tax audits, as well as besides these audits.

According to the explanatory note to the Bill, the proposed amendments will ensure the full payment of VAT and lead to an increase in tax revenues to the federal budget.

Furthermore, the Bill stipulates that the Central Bank of the RF will provide tax authorities with information on individuals identified as having risks of conducting business activities and receiving regular income. The FNS will then compare the data received from the bank with the individuals' declared income and, if any deviations are detected, initiate audits.

Banks will be required to transfer information concerning the opening (closing, or changing details) of bank accounts to tax authorities, indicating the TIN of their owners, and if an individual does not have a TIN, assign a TIN to the individual before opening an account with the bank.