Overview of tax events for June 2023

Regulatory developments

Russia and Oman have signed a convention for the avoidance of double taxation with respect to taxes on income between the countries.

For information:

The Russian Ministry of Finance is close to reaching an agreement with the UAE with regard to new double taxation treaty.

The State Duma has passed in the first reading:

• a package of tax amendments (see draft law No. 369931-8, which has been initiated by the Russian Government);

• a draft law regarding the tax on excess profit (No. 379177-8 and No. 379248-8).

The Russian Government:

• has planned to submit a number of new developments to the State Duma before the end of 2023, which are designed to promote the de-offshorisation of the national economy;

• has extended the list of checkpoints where a tax-free service is provided;

• has extended until 31 December the period when penalties will not be accrued for errors in notifications regarding taxes which have been assessed.

The Russian Ministry of Finance:

• has more than doubled the extent of the list of offshore zones. Order No. 86n dated 5 June 2023 came into effect on 1 July;

For Pepeliaev Group's comment, please visit our website

• has declared that double taxation treaties being suspended with hostile states will not affect the provisions regarding double taxation. Further, the possibility is being considered of protecting business against the growth of taxes on interest that is paid abroad on loans with foreign banks and on eurobonds if a double taxation treaty has been suspended;

• is considering a proposal to increase the amount of the duty on western companies that have decided to leave the Russian market and sell local assets;

• together with the Federal Tax Service and the Centre for the Development of Advanced Technologies has been developing a mechanism for monitoring whether excise duty has been paid in full on tobacco products and products containing nicotine based on data derived from digital labelling.

The Russian Ministry for Economic Development has come forward with a proposal for how tax benefits for foreigners who have moved into Russia may be enshrined in legislation.

Practice

Daniil Egorov, Head of the Federal Tax Service:

• an experiment is being conducted on the base of two inter-regional inspectorates for major taxpayers as a result of which the volume of documents requested from major taxpayers was reduced by 80%;

• told about the difficulties which arose when a unified tax account was introduced and apologised for “substandard implementation”.

Further reading:

After a unified tax account was introduced, the number of wrongfully made payments reduced 11-fold. Overpayments are returned and accounts are unblocked within a day.

Excise duty has been introduced in Russia on soft drinks containing sugar from 1 July.

Further reading:

An experiment started in Russia on 1 June involving the labelling of juices and certain types of soft drinks.

Having considered a request of the Russian Supreme Court, the Russian Constitutional Court arrived at the conclusion that laws do not clearly determine the priority of payments to creditors and state authorities when property of a bankrupt company is being sold. The federal legislature is to introduce amendments to specify the place of tax authorities in the succession of claims of creditors during bankruptcy (Resolution No. 28-P dated 31 May 2023).

For Pepeliaev Group's comment, please visit our website

Prosecutors who have recently been vested with the right to challenge business transactions have started to exercise such right.