Overview of Tax Events for January 2019

REGULATORY DEVELOPMENTS

The Russian Union of Industrialists and Entrepreneurs and the business community have fiercely criticized the new version of the draft law by the Russian Ministry of Economic Development that regulates greenhouse gas emissions. However, the Advisor to the Russian President on climate issues has supported it: the concept of the ‘carbon tax’, which is to be introduced, fits into the Russian Finance Ministry’s plans to transform environmental non-tax charges into taxes.

The Russian Ministry of Finance has drawn up a draft law that offers entrepreneurs additional benefits for investment. Business people will have to invest at least RUB 1 billion (or in some cases less) in a project. In return for such financing, a tax and levy rate freeze will be granted to a business for six years. Reliefs will be applied to investors in such areas as agriculture, gas processing and liquefaction, electricity generation, waste collection and treatment, tourism and IT.

The Russian Ministry of Economic Development has worked out a draft law that will eliminate the possibility of evading corporate property tax. Any building or structure that is created without a requirement to obtain a document to confirm the right to build them will not be recognised as real estate.

The Russian Government has approved a ‘Business Climate Transformation’ plan. It includes tax administration as one of the 12 priority areas. Such tax administration provides for

• improving Russia’s rank in the Doing Business research of the Word Bank in terms of its Paying Taxes indicator: from 53rd place (currently) to 30th place (in 2024);
• extending a tax free system to all regions of Russia;
• including an assessment of how effective tax benefits and other advantages are in the main areas of Russia's budgetary, tax and customs tariffs policies;
• setting timeframes in legislation, within which lists of equipment/goods subject to benefits should be accepted/updated.

The Russian Ministry of Economic Development has prepared draft methods for assessing the fiscal burden on business. It is proposed to sum up all tax payments with expenses for natural monopolies’ services and then divide them by added value less amortization. This will not take into account foreign assets and VAT paid within the price. If any indicators are not disclosed in the IFRS accounting statements, they are deemed to be zero. For business the discussion of the methods may end in the increase of taxes.

PRACTICE

Starting from 1 January 2019, foreign companies became VAT payers; these include companies that sell electronic services and content to organisations and individual entrepreneurs in Russia. They are required to register with Russian tax authorities. The VAT registration may be obtained remotely via an online service, the VAT Office for Online Service Providers (available in Russian and in English). A foreign company may on its own check whether it needs to be registered for tax purposes; an online test is provided for that purpose.

The Russian Ministry of Industry and Trade is proposing to conduct an experiment regarding the labelling of clothes, perfumes, eau de toilette, cameras and flashes from 1 March to 30 November 2019. Sellers are afraid that prices may increase because of the labelling.