REGULATORY DEVELOPMENTS

The Federation Council has ratified the new Convention between the Russian Federation and the Kingdom of Belgium on the avoidance of double taxation with respect to taxes on income and on capital and a Protocol to it.

The Russian Government has submitted to the State Duma a draft law (No. 475778-7) to ratify the Convention between the Government of the Russian Federation and the Government of Japan on the elimination of double taxation with respect to income taxes and on the prevention of fiscal evasion.

Russia has approved a draft Protocol to amend the Convention between the governments of Russia and Sweden on the avoidance of double taxation with respect to taxes on income.

The Russian Ministry of Justice has registered the orders of the Russian Federal Tax Service approving the reporting formats to be used by international groups of companies.

The authorities are discussing the increase of VAT from 18 to 20% as well as the abolition of the 10% preferential VAT rate.

PRACTICE

Between 1 June 2018 and 1 April 2019 an experiment will be held to label footwear with means of identification (Resolution No. 620 of the Russian Government dated 30 May 2018). In the future labelling will be mandatory for tobacco products, perfumes and toilet waters, various clothes, photo cameras, etc.

Further reading:

The Russian Government’s Order No. 791-r dated 28 April 2018 adopts a functioning model of the system for labelling goods with means of identification. The Russian Government’s Order No. 792-r dated 28 April 2018 adopts a list of ten groups of goods subject to mandatory labelling with means of identification specifying the timeframes for such labelling to be introduced.

In connection with the holding of the 2018 FIFA World Cup, the Russian Government has decided to expand the geographical scope of the pilot project to refund a VAT amount to foreign individuals (Resolution No. 557 dated 5 May 2018). The list of cities now includes: Kazan, Saransk, Volgograd, Kaliningrad, Nizhny Novgorod, Rostov-on-Don, Samara, Ekaterinburg.

The Russian Federal Tax Service:

• has postponed until 1 August the launch of the Transparent Business service, which is to disclose company data that used to be treated as a tax secret;
• has prepared a letter regarding the practice of ceasing preferences that are obtained unlawfully under double taxation treaties.

The Bank of Russia will, on a permanent basis, provide the Russian Federal Tax Service with information from 49 reporting forms of credit and non-credit financial institutions. The tax authorities will use this data for supervisory and analytical work.

The relevant changes came into force on 7 May 2018 in connection with the execution of an Addendum to the Agreement on Information Exchange.

According to the Russian Federal Customs Service the owners of companies performing questionable transactions when money and goods are moved across the Russian customs border will be automatically entered into the stop list. Information about such firms will be sent to the tax service and authorised banks, which may refuse to maintain accounts for such firms.