Overview of tax events for September 2020

Regulatory developments

The State Duma (the lower chamber of the Russian Parliament) has adopted the following laws:

• on new rates of excise duties on goods liable to excise duty to be introduced before 2023;
• on abolishing VAT on the sale of goods by bankrupts;
• on tax support for publishing houses (an increase in the maximum permissible losses for up to 30% of the printing costs).

The State Duma has passed in the first reading the following of the Government’s draft laws:

• No. 991147-7 on establishing a national system for tracking the movement of goods (abbreviated in Russian as “NSP”) whose launch will be a key to introducing a fiscal monitoring system in the EAEU;
• No. 984546-7 abolishing the excise duty for the producers of ethanol-based sanitizing gels.

The following governmental draft laws have been submitted to the State Duma:

• No. 1027743-7 on the federal budget for 2021–2023;
• No. 1022670-7 on amendments to Part I and Part II of the Russian Tax Code regarding the implementation of certain provisions of the Principal directions of the budgetary, tax and customs tariff policy;
• No. 1025680-7 on price control; when determining the method for choosing the prices between related companies, a tax authority should consider situations when either party to the transaction is a foreign company;
• No. 1018033-7 providing for a tax free system to cover all the country;
• No. 1022669-7 proposing that starting from 1 January 2021, the personal income tax rate should be increased up to 15% with respect to the income that exceeded RUB 5 million for the tax period. Starting from 2021, income from investments may be reduced by investment deductions only.

Something to consider:

The consideration of the draft law was put on hold as it needs to be worked through with the regions.

The Russian Ministry of Finance:

• has prepared amendments to the Russian Tax Code containing an exhaustive list of cases when tax returns should be denied;
• has posted amendments to the Russian Tax Code on regulation.gov.ru extending the mechanism of a single tax payment to companies and individual entrepreneurs.
• has developed a draft law under which tax authorities themselves will send confirmations for personal income tax deductions to companies with respect to their employees.

The Russian Union of Industrialists and Entrepreneurs has proposed that the Federal Tax Service and the Finance Ministry introduce a special tax regime for transactions involving digital financial assets.

The Russian Ministry of Internal Affairs has drafted a concept of a new federal law on migration: an advance tax is proposed to be introduced for foreign nationals who come to the country to work.

By its Resolution, the Russian Government has approved the draft protocol amending the double taxation treaty with Malta according to which the tax on dividends and interest will be increased to 15%. A similar document was signed earlier with Cyprus.

Practice

A number of Russian companies will be able to invoke a tax benefit when they transfer dividends to their shareholders in Cyprus.

The Russian Federal Tax Service and the Hong Kong Inland Revenue Department have signed an additional bilateral agreement to share country-specific reports for 2017 and 2018.

The Russian Federal Tax Service has proposed that Turkey and Nigeria be included in the list of countries that automatically exchange tax information with Russia.

How does international tax legislation change? Is it possible to conceal one's foreign accounts? How much money do Russian nationals keep outside Russia? These and other questions were answered by the deputy head of the Russian Federal Tax Service Dmitry Volvach.

By 30 September, manufacturers and importers, wholesale companies and retail chains must label perfume products, including fragrances, eau de toilette and colognes, as well as photoproducts imported into Russia.

The Russian Federal Tax Service is launching pilot projects to reduce the timeframes to one month for paying VAT refunds.

Additionally:

According to the deputy head of the Russian Federal Tax Service Dmitri Volvach, the development of the automated system controlling VAT refunds from the budget (ASC VAT) has demonstrated results in tax control that are unparalleled anywhere in the world.

The Federal Tax Service has summarised its work for 8 months of 2020.

The Russian Supreme Court:

• has confirmed the possibility of reassessing the property tax assessed based on the inventory value if such tax considerably exceeds the tax based on the cadastral value;
• has reversed the judgments of lower courts and referred for a new trial a case concerning the application of thin capitalisation rules where intra-group loans were issued.