Overview of tax events for December 2022

Regulatory Developments

The Russian President has signed the following laws:

• law No. 523-FZ dated 19 December 2022 which has introduced many amendments into the Russian Tax Code, and, among other things, has adjusted the taxation of exchange differences for claims which were not settled as at 31 December 2022;

• law No. 549-FZ dated 19 December 2022 and the annotation which simplifies confirming the zero VAT rate for exporters;

• law No. 565-FZ dated 28 December 2022 on the rules for adjusting the profit of a controlled foreign company (CFC) whose permanent location has not been included in the list of hostile states.

The State Duma:

• has adopted in the first reading the Government's draft law No. 135666-8 on the procedure for confirming the zero VAT rate when goods are sold to foreign individuals from a warehouse located in a foreign state;

• is preparing to ratify a treaty with Belarus (draft law No. 254516-8), which is necessary for common principles to be implemented of how indirect taxes work;

• is considering draft law No. 263208-8 on including in the Russian Criminal Code article 173.3 “Selling and/or submitting to tax authorities VAT invoices and tax returns which are known to be falsified”.

The Russian Government has approved the suspension of the double tax treaty between Russia and Latvia.

The tax services of Russia and Turkmenistan have signed a memorandum of understanding and technical cooperation.

The Russian Ministry of Finance:

• intends to stimulate foreign investments in the country in the case of changes in the existing double tax treaties and to minimise the possibilities for Russian businesses to structure the holding of ownership using these jurisdictions;

• is ready to discuss the removal of the UAE from the “black list” of offshore jurisdictions only after profit tax is introduced in the country.

Practice 

Official Secretary and Deputy Minister of Finance of Russia Alexey Sazanov has summarised tax and customs results of the year. He has also outlined plans for 2023.

Russia is the only country which has not reported to the OECD information about how many and what countries it exchanged tax and banking information with in 2021 in the framework of the Common Reporting Standard.

The Russian Federal Tax Service has:

• made available as public information companies’ data for 2021 regarding arrears and debts on penalties and fines;

• created on its official website a promo page which will help taxpayers understand all details of the transition to the unified tax account;

• amended the list of countries with which the exchange of tax data is carried out automatically;

• implemented the exchange of machine-readable powers of attorney issued by way of substitution;

• expanded its service of converting documents to a readable format (Visualisation of electronic documents).

The experiment of implementing the tax free system in Russia has been extended until the end of 2023.