Overview of Tax events for December 2019

REGULATORY DEVELOPMENTS

The State Duma has adopted a law that duplicates the ban, for which the Russian Criminal Procedure Code provides, on seizing declarations submitted during the amnesty of capitals and using such declarations in criminal proceedings.

The Russian President has submitted to the State Duma a draft law that provides for the decriminalization of the punishment for violating the timeframes for the repatriation of foreign currency revenues unless the entrepreneur has previously faced an administrative fine for similar violations. The parameters of a failure to return currency revenues have also been determined. It has also been proposed that the amount of tax arrears entailing criminal liability be increased. Amendments are being made to article 210 of the Russian Criminal Code on establishing a criminal syndicate and to articles 15.25 and 23.1 of the Russian Code of Administrative Offences.

The Russian Supreme Court has submitted to the State Duma a draft federal law with amendments to the Russian Criminal Procedure Code proposing that one more chance to avoid criminal liability be given to those charged with tax crimes – if the debt is settled during the proceedings before the court withdraws for sentencing.

A governmental draft law has been submitted to the State Duma to ratify the Protocol concerning electronic information exchange between CIS member states for tax administration purposes.

The Russian Federal Tax Service has published administrative guidelines for exercising control and supervision over compliance with currency legislation.

PRACTICE

The Russian Ministry of Finance has clarified that the multilateral Convention with regard to Russian double tax treaties to which it applies will become applicable no earlier than 1 January 2021.

Russia has joined the new OECD procedure that allows potential disputes with multinational corporations to be settled at the pre-trial stage (International Compliance Assurance Programme (ICAP) 2.0).

Russia’s mechanism for settling disputes with tax authorities abroad (mutual agreement procedures) is underdeveloped, an OECD expert report notes.

The Russian Federal Tax Service has sent information about foreign persons’ accounts and assets in Russia to the tax authorities in 58 countries. The tax authorities of over 70 jurisdictions have provided the Russian Federal Tax Service with the information about the Russian nationals’ foreign accounts and assets for 2018.

A number of foreign companies providing electronic services in Russia have faced difficulties when transferring the “Google tax”: banks reject tax payments from foreign accounts due to the absence of full banking details in payment orders.

Banks have started to receive tax authorities’ requests for documents claimed from clients that were legal entities as part of measures to exercise control over compliance with Law No. 115-FZ. The specified documents clarify the economic substance of tax being transferred to the accounts of individuals.

The Russian Constitutional Court has announced its Resolution (No. 41-P) in the case to check whether article 146(2)(15) conforms to the Constitution with regard to providing a tax exemption for transactions to sell a bankrupt’s property, The court has acknowledged that the above provision contradicts the Russian Constitution to the extent that it prevents the buyer from obtaining a deduction if the bankrupt seller sets out VAT in the invoice. However, two material reservations have been made.