Overview of tax events for November 2023

Regulatory developments

The State Duma:

• has passed a law introducing extensive amendments to the Russian Tax Code among which are provisions that provide for (i) certain tax benefits to be restored for companies which were in effect before double taxation treaties were suspended with certain states; (ii) the toughening of TP tax control; (iii) taxation at source in Russia of income of foreign persons if such income was obtained as a result of the deviation of transaction prices from market prices; (iv) an adjustment of requests for information to be provided from the consolidated financial statements of an international group and the financial statements of members of the international group; (v) a considerable increase of the amounts of fines for the failure to submit information and documents relating to controlled transactions and the international group.

• is preparing to pass a draft law (No. 477168-8) which will enshrine the partial suspension of taxation treaties with hostile states.

The Russian Federal Tax Service:

• has approved the new form of tax computation of income of foreign companies;

• has published a draft order approving the list of countries which allow for systemic non-compliance with the obligations to automatically exchange country-based reports (it is proposed that 22 jurisdictions be included). Further, the right of tax authorities is envisaged to demand, under the threat of a penalty, country reports directly from Russian subsidiaries of international groups;

• is drafting an order with a List of states (territories) which do not ensure information exchange with Russia for the purposes of taxation.

Practice

The Russian Ministry of Finance:

• has clarified the operation in time of the Russian Ministry of Finance’s Order No. 86n dated 15 June 2023, which expands the list of offshore zones;

• is planning to sign an updated tax treaty with Malaysia in January 2024;

• may discuss the exclusion of the UAE from the blacklist if a double taxation treaty is signed with it

The Russian Federal Tax Service will devise a roadmap for tax authorities of the BRICS member states. The work will be based on a project principle: each tax authority will monitor a separate project which is of utmost interest to it.