Overview of tax events for June 2020

Regulatory Developments

On 23 June, the Russian President addressed Russian citizens with the following proposals:

• residents who own assets abroad should be granted the right to pay a fixed tax amount of RUB 5 million a year without submitting any reports and without paying CFC profit tax;
• for Russian IT companies insurance contributions should be reduced from 14 % to 7.6% and profit tax should be reduced from 20% to 3%. It is also proposed that VAT on the advertising of developments and software on foreign digital sites should be cancelled. All changes will be implemented for an unlimited period and the eligible entities will include all Russian IT companies whose income from the sale of software and services to develop, implement and support it accounts for at least 90% of all income;
• from 1 January 2021 a progressive taxation should be introduced with regard to personal income tax, in particular income exceeding RUB 5 million per year will be taxed at the rate of 15%.

The State Duma:

• has approved in the first reading a governmental draft law (No. 814739-7) to reduce the value containing an error retroactively from the first date when it was entered in the register. The results of the assessment will be examined in an open procedure and no adjustments will be allowed outside such open procedure;
• the Russian Government has submitted draft amendments to the Russian Tax Code (draft law No. 969592-7) that release insurance contributions for managers’ liability from personal income tax.

The Russian Government has included in the submitted Recovery Plan for the Russian Economy measures to make currency legislation more liberal. In particular, it is planned to give up total control over foreign trade transactions and not to impose fines for the non-repatriation of proceeds in foreign currency next year.

Businesses may be allowed to deduct a previous loss in its entirety: the restriction introduced in 2017 may be lifted for 2020.

The Russian Ministry of Economic Development proposes standardising tax preferences for the residents of three types of Special Economic Zones and is preparing to give up the idea of classifying Special Economic Zones into types. Specifics will be provided only for port areas.

The Russian Ministry of Energy supports the idea of shifting the obligation to pay excise duty from oil refineries to petrol stations.

The Russian Ministry of Communications has supported the amendments to the law “On communication” that stipulate the status of communication cables as movable property which is not subject to state registration.

Practice

From 1 July:

• some exemptions for individuals and entities that were introduced with the commencement of the self-isolation regime will no longer be in force . The tax authorities are resuming tax control measures, the recovery of debts and the application of provisional remedies. For July which is starting, businesses will have to pay taxes and contributions in accordance with a standard procedure;
• the authorities are toughening supervision over the non-targeted use of agricultural lands. The land supervision authorities will report all the identified cases of such use to the tax service which will use this as a ground for assessing an additional land tax;
• the import and sale of food products with a substitute of diary fat will be subject to VAT at the rate of 10%;
• mandatory labelling is introduced for tobacco, footwear and medicines.

Until 31 December 2020 the period is extended for the experiment to be held with regard to the traceability of goods released in Russia in accordance with the customs procedure of release for domestic consumption (the Russian Government's Resolution No. 913 dated 23 June 2020).

The Deputy Head of the Russian Ministry of Finance Alexey Sazanov has called introducing the tax on added income the main mistake in his career.

The Russian Federal Tax Service:

• has refined the personal accounts for entities and individuals to accelerate the lifting of restrictions on transactions on debtors’ accounts and to update the “Bankinform” online service as to the availability of valid decisions on suspension;
• for the convenience of taxpayers who are individuals and with a view to improving the quality of reporting to the Russian Federal Tax Service via the official website, the Taxik chat bot has been created.

The Gulidov Krasnoyarsk Non-Ferrous Metals Plant has managed to have a case reconsidered concerning the recovery of over RUB 2.6 billion of tax debts. The tax inspectorate concluded that the taxpayer was involved in “a tax evasion scheme relating to formal document management being created with respect to the supply of a precious metal via a chain of suppliers that do not pay VAT to the state budget”.