Overview of Tax events for March 2018

REGULATORY DEVELOPMENTS

The Chairman of the Russian Government (the “Government”) has signed a resolution assigning the status of ‘priority development territories’ to 19 single-industry towns (known in Russia as 'monotowns') in Russia. Now, out of 319 monotowns in Russia, 59 have the status of a Priority Social and Economic Development Area.

The Russian Ministry of Industry and Trade (the “Ministry of Industry and Trade”) has expanded the list of cars with a cost of RUB 3 million upwards which are subject to higher transport tax. The list has been expanded owing to the growth in car prices caused by increased excise duties and the recycling fee.

The following draft laws have been submitted to the State Duma:

• No. 419059-7 “On digital financial assets”. Mining (activities aimed at creating of cryptocurrency) will be classified as an entrepreneurial activity if for three months a miner, whether an individual entrepreneur or a legal entity, exceeds the electricity consumption limits the Government will establish. This means that miners will have to timely pay their taxes. Two-year tax holidays for miners are under discussion. A number of amendments are being prepared which set out the need to pay personal income tax on cryptocurrency sales;
• No. 419090-7 on regulation of the crowdfunding market. It is expected that specialised platforms will be exempted from VAT, that their cooperation with the credit reference bureau will be allowed, and that they will be vested with the functions of a tax agent for personal income tax.

The Chairman of the Government has given the following instructions to ministers:

• before 1 September 2018, to submit a draft federal law to include the quasi-tax payments in the Russian Tax Code (the “Tax Code”).

Further reading:

The Russian Ministry of Finance (the “Ministry of Finance”) suggests that the Tax Code should start regulating amounts collected by the Platon system, mobile operators’ contributions, payments for charges for an adverse impact on the environment, the environmental charge, resort fees, and the recycling fee.

• in May 2018 to submit to the Government agreed draft regulations stipulating that pieces of Russian tax legislation coming into effect on 1 January of the year following the year when such regulations have been adopted should be published no later than on 1 September of the current year;
• in April 2018 together with the Russian Ministry of Internal Affairs to submit to the Government the proposals regarding obliging tax authorities to provide substantiated opinions on whether the signs of a crime are present when criminal cases regarding tax, levies, and insurance payments are being investigated.

The Ministry of Finance has submitted to the Federation Council draft guidelines for the assessment of the efficiency of tax benefits. It is proposed to divide all benefits into three types.

In summer 2018 the labelling of articles made of silver, gold, or precious stones will be launched in test mode. The Ministry of Finance will oversee the experiment and report the results to the Government by 1 December.

It is possible that compulsory labelling of cigarettes in Russia will only be launched on 1 July 2019, i.e. a year later than planned. This follows from the draft law prepared by the Russian Ministry of Healthcare.

The Government is working through the issue of introducing labelling for beer, beer-based beverages, cider, and mead.

The Chairman of the Government has urged the Russian Federal Tax Service to get ready to implement the system for the tracking of goods not only in Russia but also across the EAEU. The system should be applicable to all kinds of goods.

For foreign (non-offshore) companies the restriction on participating in the issued capital of Russian small and medium entities may be lifted. The information on whether foreign investors comply with the applicable requirements will be sent to the tax service by auditors.

PRACTICE

“Tax authorities intend to use the tax monitoring procedure more often when interacting with major taxpayers”, said Daniil Egorov, Deputy Head of the Russian Federal Tax Service.

The Ministry of Industry and Trade is starting to accept applications from shops to participate in a pilot ‘Tax Free’ project.