Overview of Tax Events for November 2018
REGULATORY DEVELOPMENTS
The law on the reform of procedural legislation has been adopted (it comes into force from 1 January 2019). Only lawyers can be representatives under a power of attorney in commercial proceedings. The timeframe for the consideration of a case in a state commercial court is extended from 3 to 6 months. It has been enshrined in the law that the reviews of the Russian Supreme Court have the effect of setting a precedent.
The State Duma has allowing tax expenses to be reduced for companies and their shareholders when they withdraw from companies or when companies are liquidated. In addition, criteria for classifying companies as CFCs (Controlled Foreign Companies) have been specified, as have cases when the tax authority should be provided with a notification of a CFC.
The Russian Government’s Commission for Legislative Drafting has on the ratification of the 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 Federal Tax Service has which abolishes returns for transport tax and land tax for legal entities.
A draft law of the Russian Ministry of Finance that concerns systematising non-tax payments has been about a tax for the recycling of motor vehicles, goods and packaging to replace the recycling fee and environmental fee.
PRACTICE
On 1 December about Russian companies was published on the official website of the Russian Federal Tax Service. This is publicly available information about amounts of tax arrears and details of whether companies have committed tax offences.
In 2019, for collecting VAT for electronic services will be changed. All foreign companies will be obliged to register with the Russian Federal Tax Service and pay the tax independently.
From 1 January 2019 the laws that reduce profit tax rates and were approved after 1 January 2018 by the Russian constituent entities with respect to taxpayers, but were not directly provided for by chapter 25 of the Russian Tax Code.
Letter No. 03-03-10/77793 of the Russian Ministry of Finance dated 29 October 2018.
The Russian Federal Tax Service:
- by the end of 2018 the first reporting campaign for the automated exchange of tax information with other countries. Automated exchange has been activated with 89 jurisdictions.
- that tobacco companies could be enjoying an unlawful tax benefit from their standard model of work. The Tax Service has turned its attention to the warehouse stocks which producers have been creating in the fourth quarter and have been selling in November and December to their affiliated distributors or warehouses. By artificially building up such sales certain companies have fixed excise duty rates before the increase in 2019, thus minimising the tax burden.
The Moscow City Court has a Resolution of the Mayor’s Office which, at the end of 2016, trebled the cadastral value of certain facilities, and increased that of other facilities 15-fold, which led to corporate property tax being retroactively increased. Now the owners of shopping malls and offices in Moscow can obtain a refund of corporate property tax for 2016 that they overpaid.
A taxpayer (RUB 1.9 million) from the tax authority because a bank account was unlawfully blocked. The ground for such blocking was a tax debt of RUB 3,000.
The Russian Investigative Committee has to its employees that they identify and independently investigate crimes that are concurrent with tax crimes. It has been identified that cases for crimes under articles 172, 173.1, 173.2, 303 and 327 of the Russian Criminal Code are initiated only in certain cases, and usually investigators limit themselves to investigating crimes falling within their competence. As a result, exhaustive measures are not taken to “comprehensively combat tax-related crimes’.