Overview of Tax Events for June 2018

On 16 June Resolution No. 693 of the Russian Government was signed ‘On the implementation of the international automatic exchange of financial information with competent authorities of foreign states (territories)’.

Draft law No. 488869-7 (initiated by deputies of the State Duma and members of the Federal Council) was submitted to the State Duma ‘On amending part one and chapter 25 of part two of the Tax Code of the Russian Federation (with respect to establishing a tax regime for international holding companies)’.

The following draft laws were also submitted:

• № 497382-7on the implementation of the ‘one-stop-shop’ principle when annual financial statements are provided;
• on the completion of the ‘tax manoeuvre’ in the oil and gas field (No. 493989-7 and No. 493997-7);
• No. 489169-7 and No. 489162-7 on changes to legislation on taxes and levies. It is provided that:
• the VAT base rate will be increased to 20% (the beneficial rate for the time being will remain the same);
• the aggregate tariff for insurance contributions will be reduced from 34 to 30%:

In addition to the VAT increase from 2019 several bonuses for business are expected:

• the new timeframes for a VAT desk audit will be two months (but if the tax authority suspects a violation, the audit may be extended to three months);
• the tax amount companies must pay within three years to be able to claim an accelerated VAT refund will be reduced from RUB 7 billion to RUB 2 billion;
• a list of necessary documents for obtaining VAT will be optimised and the requirements for such documents will be mitigated;
• transactions for a total amount of over RUB 1 billion will no longer be treated as controlled transactions under transfer pricing rules;
• the tax on movable property will be cancelled.

The Russian Ministry of Economic Development is preparing a new set of measures to improve the business climate. The specified set will embrace 14 fields including taxes. In the area of tax administration it is planned to stipulate that at least one year must pass from the time when measures are adopted that increase the burden on business and the time when such measures come into force (and the specified measures must come into force on the same date - 1 January). Other proposals include: developing, jointly with business, a set of methods to make tax incentives effective and sought-after; encouraging regions to introduce investment deductions; creating a property tax exemption for equipment that is undergoing reconstruction and that yields no income.

A draft law on creating offshore territories in Russia will soon be submitted to the State Duma.

The heads of the tax services of Brazil, Russia, India, China and South Africa have agreed to form a Capacity Building Mechanism, which is an annual action plan for the experts of the countries’ tax authorities to exchange knowledge and experience. The plan includes joint training programmes dedicated to taxation issues.

PRACTICE

The Tax Service has adopted a new Concept for managing bad debt. It provides that within the framework of control measures actions must be performed that are aimed at making the processes for identifying cases of tax evasion as automated as possible.

The Russian Unified State Register of Legal Entities (known by the Russian abbreviation EGRUL) has become a world leader for the quality and availability of the information in it. Russia is a world leader with regard to the total volume of data on the owners of companies. Only from the Russian EGRUL and from the Registers of Latvia and Estonia can users download information on a daily basis.

About one million small and medium-sized companies must, by 1 July, have switched to new cash register equipment which allows the Russian Federal Tax Service to obtain data on each online transaction.

The tax free system for foreigners leaving Russia will apply to the entire country from 2019, after the pilot project has been completed.