Overview of Tax events for October 2019

Regulatory Developments

“The main objectives of the budgetary, tax and customs, and tariff policies for 2020 and for the planning period of 2021 and 2022” have been published on the website of the Russian Ministry of Finance.

The Russian Union of Industrialists and Entrepreneurs (Russian acronym - RSPP) has sent proposals to the Russian Ministry of Finance on how to improve the tax regime of major holding structures. The RSPP proposes to mitigate the conditions for tax exemptions of dividends and income when a party withdraws from a company’s capital, and to implement a concept of allocation of costs within holding structures in Russia.

The RSPP’s Head, Alexander Shokhin complained to the Russian Ministry of Finance that the amendment which comes into force from 2020 allows the tax to be collected on the cadastral value of practically any piece of corporate real estate. The Ministry admitted that there is an ‘inaccuracy’ and has prepared amendments to the adopted law.

The RSPP and sector-related ministries have criticised the draft law concerning the reduction of greenhouse gas emissions developed by the Russian Ministry of Economic Development. They are not satisfied with introduction of charges five years after the law is adopted.

The Association of European Businesses in Russia has asked the Russian Government to refuse to implement the plan for increasing the disposal charge for cars.

The Association of Retail Companies has proposed that VAT and profit tax not be collected from products whose shelf life is about to expire if these products were granted free of charge for charitable purposes.

The Russian Ministry of Industry and Commerce has developed amendments to the Tax Code concerning expansion of tax free system from 2021 throughout the entire territory of Russia and concerning the reduction from RUB 10,000 to RUB 8,000 of the lowest threshold of purchase amounts for a tax refund. It also proposed to return tax when a person is exporting purchased excise products (alcohol and tobacco).

For information:

From 1 October the Russian Federal Tax Service has launched testing of the issuing of tax free receipts in electronic form.

Practice

Russia was ranked 28th in 'Doing Business', the World Bank's updated ratings, moving up by three positions in comparison with last year. Russian Government officials do not agree with such a low assessment.

The first hearing of the Expert Council has been held in the Russian Federal Tax Service. The goal of the Expert Council is to form proposals for improving the practice of the application of tax legislation by major taxpayers taking into account sector-related specifics and to ensure uniform law enforcement approaches.

The tax authorities have discussed the programme for the legalisation of shadow payroll. The Deputy Head of the Russian Federal Tax Service, Svetlana Bondarchuk, noted that this problem is topical for all Russian regions and stated that the share of shadow payroll is high in the economy.

The Russian Ministry of Economic Development is discussing with experts how to amend the Criminal and Criminal Procedure Codes in order to make business in Russia less risky. The proposals include a return to the previous system for initiating tax-based criminal cases when an opinion of the tax authority was a mandatory ground. It is also proposed to allow documents to be requested only for three years when tax evasion is investigated (article 199 of the Russian Criminal Code) and to assess the significance of tax arrears only in relative amounts.

A reference to the calculation of limitation periods in tax crimes from the moment of voluntary repayment or collection of arrears has been deleted from the draft resolution of the Plenum of the Russian Supreme Court. However, the document does not contain rules, on which the business community insisted, concerning the calculation of such period from the date when the tax was not paid.