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Overview of Tax events for November 2019

06.12.2019
4 min read
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Regulatory developments

The Russian President has signed:

  • amendments to the law “On international companies” allowing for international funds to be created in special administrative districts;
  • a law specifying the list of property of legal entities which has passed to them from individuals and which is subject to tax based on the cadastral value.

Starting from 1 January 2020, the recycling tax rate will be adjusted with respect to wheeled motor vehicles (chassis) and trailers (the Russian Government's Resolution No. 1457 dated 15 November 2019).

Starting from 1 January 2020, Panama and San Marino will be excluded from the list of states and territories that do not exchange tax information with Russia.

Russia is launching mandatory labelling of car tyres, perfumes and photo cameras.

The Russian Government’s Decree No. 2647-r dated 8 November 2019 has set a deadline for introducing mandatory labelling of certain types of dairy products – 1 June 2020.

Additionally:

The Russian Ministry of Industry and Trade has refused to postpone the deadlines for implementing the labelling of food products.

Irradiated products will shortly be assigned the corresponding labelling.

The discussion at governmental level over agreements for the promoting and safeguarding of capital investments has been completed, by and large. A package of draft laws (Nos. 828237-7, 828239-7, 828241-7 and 828243-7) has been put forward to the State Duma. On 18 November, State Duma deputies together with experts, business figures and relevant ministries discussed the proposals at the venue of Sberbank’s Corporate University.

A protocol regarding information exchange in electronic form among CIS member states has been put before the State Duma and will be adopted by the end of the year. This provides for an automated exchange of information regarding income of companies and individuals which was obtained in another state and regarding their motor vehicles and real estate that are located abroad.

A working group on statutory regulation at the Autonomous Non-Commercial Organisation “Digital Economy” (ANCO DE) has approved a draft law regarding the deduction procedure of VAT on e-services acquired from foreign companies.

For information:

The Russian Union of Industrialists and Entrepreneurs addressed the Russian President asking to him to instruct relevant ministries to promptly explore issues of taxation in the digital sphere and in currency regulation, and the conditions under which administrative and criminal liability is imposed.

Owing to digitalisation, Russian taxpayers will soon realise that it is useless to “fight” with the tax service, said Anton Siluanov, first vice-president and finance minister of the Russian Federation.

In its address to the Chairman of the Government, a working group of the Analytical Centre under the Russian Government proposed that article 54.1 of the Russian Tax Code be amended and the “tax reconstruction method” be entrenched.

Additionally:

The Russian Federal Tax Service has not decided on the fines for breaching anti-avoidance provisions of the Russian Tax Code (article 54.1), but is inclined to set a 40% fine, reported the deputy head of the Service Daniil Egorov.

Practice

The Russian Finance Ministry and the Federal Tax Service consider as insufficiently effective their cooperation with experts from the World Bank with respect to the tax section of the Doing Business (DB) ranking. They believe that the existing methodology hardly allows for further measures of efficient tax administration to be developed, which measures were taken into account for the purposes of the ranking.

For the second time since the beginning of the year the Russian Ministry of Finance has sharply hiked the plan for collecting VAT, profit tax and fines for the state budget with respect to legal entities.

Sergey Arakelov, deputy head of the Federal Tax Service, spoke about the declining number of tax disputes, which trend continued in 2019. It was noted that measures should be taken to reduce the number of appeals against actions (omissions) of officers of tax authorities.

In 2020, the Federal State Statistics Service (abbreviated in Russian as ‘Rosstat’) will launch pilot projects under which huge sets of data held by the Russian Pension Fund and the Federal Tax Service will be used instead of, and in addition to, traditional data from statutory filings.

Next year, the Russian customs office intends to execute 95% of customs declarations in electronic form.

The Federal Tax Service and the Federal Service for Labour and Employment (abbreviated in Russian as ‘Rostrud’) have agreed on concurrent audits of employers who in fact hire self-employed persons as employees by concluding contracts for services with them.

The Russian Supreme Court recommends to courts that they determine the amount of damage to the state budget resulting from tax crimes. Such an explanation is set out in the Plenum’s Resolution No. 48 dated 26 November 2019. In this Resolution, the Court has also expressed its position on limitation periods under criminal cases concerning tax crimes.

In its Resolution No. 49 dated 26 November 2016, the Plenum limited the timeframes for an additional assessment of customs charges. The Court prohibited claims against importers that they should make additional payments to the state budget further to a decision of a higher tax body on the expiry of 3 years after goods were imported into the country. 

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