Overview of Tax Events for April 2019

Regulatory Developments

An agreement on the labelling of products in the Eurasian Economic Union (the “EAEU”) has come into force. This agreement was signed a year ago by the heads of governments of the member states. The document grants the right to each member state of the EAEU to propose the implementation of the labelling of products in all five countries.

The Russian President has signed the Federal Law “On amending Part II of the Tax Code of the Russian Federation and article 9 of the Federal Law ‘On amending Part I and Part II of the Tax Code of the Russian Federation and certain items of Russian legislation on taxes and levies’”. This Federal Law provides for a VAT deduction when ‘exporting’ services, i.e. when Russia is not deemed to be the place of supply of the services.

The Russian Government's Resolution No. 439 dated 12 April 2019 has established the procedure for assessing whether tax expenses were economically feasible and efficient. The Russian Ministry of Finance will summarise the results of the assessment and will submit them for consideration to the Governmental Commission considering the issues of how to optimise and increase the efficiency of the state budget expenses.

The State Duma (the lower chamber of the Russian Parliament) has adopted the following:

• a law to ratify the Multilateral Convention on preventing profit shifting. It is provided that the Convention may be applied to the current international double taxation treaty entered into by the Russian Federation without bilateral negotiations;
• a draft law in the second reading (No. 553542-7, initiated by the Russian Government) to grant an exemption from taxes and levies in connection with preparing for and staging UEFA's Euro 2020 tournament in Russia;
• a set of draft laws in the first reading (No. 687103-7,No. 687102-7, and No. 687101-7) to extend the amnesty of capital until 1 March 2020.

For information:

About 19,000 declarations have been filed during the two initial stages of the amnesty of capital. The volume of declared capital is confidential.

The Chairman of the Russian Government has instructed the Ministry of Finance to submit proposals concerning the preparation of the new version of the Tax Code before 24 May. The new version is being developed owing to the need to improve the structure of the Tax Code and to simplify the numeration of its articles, the Ministry of Finance’s Press Service informed.

The Russian Ministry of Finance has made public for consultation a draft law to include in the Russian Tax Code the following five chapters: on the environmental tax, the recycling charge, the toll from users of motor roads, the tax from telecom operators, and the hotel charge.

Practice

The Russian Federal Tax Service:

• has completed the reform of control over major taxpayers;
• before the end of the year the Tax Service will launch a Risk Register. It is a complex system allowing assessment models and sector-related cards to be created in order to timely inform taxpayers of possible risks;
• has agreed with the arguments of international companies concerning payment of the Google tax, of which the payment procedure had changed from 1 January 2019. A special clarification has been published.

For information:

From the beginning of 2019, 1,200 such companies (with B2B supplies) have been registered with the Russian tax authorities. The total number of foreign suppliers of electronic services registered in Russia for tax purposes is 1,400. A further 100 companies are going to be registered shortly.

• has explained that if a constituent entity of the Russian Federation had established a reduced tax rate before Federal Law No. 302-FZ dated 3 August 2018 came into force, then the constituent entity may extend the rate until 1 January 2023;
• set out characteristic features of persons that are professional nominal directors (Letter No. GD-4-14/5722@ dated 29 March 2019).

Not later than 31 May 2019 Russian financial market institutions must file with the Russian Federal Tax Service information about the financial accounts of their foreign clients for the reporting year 2018.

Overview No. 1 of case law of the Russian Supreme Court (2019) (approved by the Presidium of the Supreme Court on 24 April 2019) has been published, including with respect to the application of the legislation on taxes and levies.