Overview of tax events for March 2020

REGULATORY DEVELOPMENTS

Russia has ratified a protocol of the annual automatic exchange of financial information between the CIS countries.

Federal Law No. 37-FZ dated 1 March 2020

The Chairman of the Russian Government has approved the Concept for the development of a new form of control - the tax monitoring.

The Russian President has signed:

- a set of laws to protect and encourage capital investments in Russia (known in Russia by the abbreviation “SZPK” (including amendments to the Russian Tax Code). A so-called stabilisation clause, which warranties that there will be no changes with regard to a number of taxes, will be provided for major projects. Warranties regarding non-tax payments and export customs duties may be granted for large-scale projects. A mechanism is also provided for the reimbursement of the costs incurred by investors on transportation, energy, utility, social and digital infrastructure in the amount of the taxes paid.

The document will also apply to projects that emerged after May 2018.

- law No. 73-FZ dated 01 April 2020 with regard to improving the criminal-law regulation of economic relationships. Amendments have been made with regard to the punishments for currency and tax crimes, and the application of article 210 of the Russian Criminal Code (organising a criminal community) has been limited. The amount of the tax arrears entailing criminal liability has been increased: up to RUB 2.7 million on a large scale and up to RUB 13.5 million on an extremely large scale for individuals and up to RUB 15 million and RUB 45 million, respectively, for companies. Shares are excluded.

- law No. 102-FZ dated 1 April 2020, which entitles the Russian Government, the supreme executive authorities of the Russian constituent entities and the administrations of municipalities to issue regulations for the period between 1 January 2020 and 31 December 2020 to extend the set timeframes for the payment of taxes, duties and insurance contributions.

The Central Bank of Russia and the Russian Government have announced measures to support the economy in connection with the spread of the coronavirus and volatility on the global financial and raw materials markets.

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In in his public address on 25 March the Russian President proposed as follows:

- increasing up to 15% the rate of tax on income withdrawn abroad, and if the countries refuse to adjust double tax treaties, Russia will withdraw from such treaties. The Finance Ministry is to go through all the treaties within a month. Russia has already sent the relevant treaty to the Government of Cyprus;

- providing to SMEs a six-month grace period for all taxes, except VAT, and halving the contributions payable (to 15%) . The reduced rate will apply to the salaries exceeding the monthly minimum wage (RUB 12,130).

For information:

Until 1 May the application of enforced collection measures will be suspended for those taxpayers about which the information has been entered in the unified register of small and medium-sized businesses and the timeframes will be postponed for making decisions to suspend transactions on the accounts of such taxpayers to secure the recovery of debt.

• imposing a moratorium for 6 months on the filing of bankruptcy petitions with respect to companies from the sectors of the economy undermined by the coronavirus;
• introducing for individuals a tax on interest on deposits worth more than RUB 1 million and on bonds, starting from 2021.
• The Russian Government:
• has determined 22 sectors that will be the first to obtain support from the state (including in terms of taxation);
• is developing the second package of measures to support the economy during the spread of the coronavirus infection. Business associations have systematized their requests to the authorities.

PRACTICE

The deadline for filing the financial statements for 2019 is to be moved from 30 March 2020 to 6 April 2020 (letter dated 27 March 2020 No. 07-04-07/24096/VD-4-1/5303@).

The Russian Federal Tax Service is suspending until 1 May 2020 the application of measures to recover taxes, penalties and fines (and the making of decisions to suspend the transactions on accounts to secure such procedures) with respect SMEs.

For information:

The Russian Federal Tax Service has answered questions about the measures that have been taken to support taxpayers as instructed by the Russian President and the Russian Government.

The Russian Federal Tax Service is suspending until 1 May 2020 the scheduling of field tax audits, audits of the users of online cash registers as well as control measures applied to all taxpayers to ensure compliance with the requirements of currency legislation and measures concerning the matters of state-regulated types of activity in the area of gambling and lotteries.

Order No. ED-7-2/181@ dated 20 March 2020

Owing to the coronavirus pandemic it has become more difficult for the owners of offshore businesses to evade the legislation on CFCs and to avoid paying taxes in Russia. Owing to the coronavirus many countries have closed their borders, which has narrowed the loophole for evading the rule of 183 days.