Tax law and tax disputes

Rates amended for insurance contributions in 2012 – 2013 Pepeliaev Group advises that on 23 November, the State Duma adopted a Federal Law that amends the rates of insurance contributions payable to the state social security funds.

Amendments to Russia’s double tax treaties with Switzerland and Luxembourg Pepeliaev Group advises that the Russian Government has approved draft Protocols amending the Agreement between the Russian Federation and the Grand Duchy of Luxembourg for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, and the Agreement between the Russian Federation and the Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income and Capital.

The Russian Supreme Arbitration Court will resolve the issue of whether taxpayers may treat as deductible VAT paid as part of the expenditure on the repair of general infrastructure facilities that are in state ownership Pepeliaev Group advises that, on 25 October 2011, the Presidium of the Russian Supreme Arbitration Court will resolve the issue of whether taxpayers may treat as deductible VAT paid as part of the expenditure on the repair of infrastructure facilities that are in general use and that are not owned by the taxpayer but are required for it to carry out its economic activity (the SAC’s Ruling No.  VAS-3844/11 dated 14 July 2011 – the OOO Tulacement case).

What is new in the application of Russian thin capitalisation rules Pepeliaev Group law firm advises that the Presidium of the Supreme Arbitration Court (the “SAC”) will for the first time consider how the non-discrimination provisions of international double tax treaties correlate with Russian thin capitalisation rules, which in certain cases provide for interest accrued on a taxpayer’s debt to be reclassified as dividends.

New rules for documenting relationships in the area of investment and construction: tax implications Pepeliaev Group advises that, on 28 July 2011, a Resolution of the Plenum of the Russian Supreme Arbitration Court with direct implications for construction and investment activity was published on the SAC’s website. The Resolution creates substantial tax risks for all those involved in that sector: builders, investors and developers.

Companies that operate in Sakhalin Region and a number of other regions are entitled to use accelerated depreciation of fixed assets and deduct larger amounts as expenses for tax purposes On 5 July 2011, the Federal arbitration Court for the Far Eastern Circuit issued its precedent forming resolution No. F03-2566/2011 which states that companies operating in Sakhalin Region are entitled to apply a special coefficient for their fixed assets depreciation (but not more than 2). The court’s conclusions may also apply to companies operating in other regions of the Far North and areas equivalent to the Far North.

Changes in tax control of transfer pricing

On 8 July 2011 the Russian State Duma adopted in the third reading the law On amending certain legislative items of the Russian Federation in connection with improving the pricing rules for tax purposes.

Significant amendments to chapter 21 of the Russian Tax Code Pepeliaev Group advises that on 6 July 2011 the Russian State Duma adopted in the third reading the law On amending part one and two of the Russian Tax Code and certain items of Russian legislation on taxes and levies.

THE COURTS WIL APPLY A STRICTER APPROACH TO TAXPAYERS WHO TRY TO REDUCE TAXES ADDITIONALLY ASSESSED WITHIN THE SCOPE OF TAX AUDITS The law firm Pepeliaev Group advises that the Presidium of the Russian Supreme Arbitration Court has taken a stricter approach to interpreting legislation with regard to some actions of the taxpayers that they take in the course of or after tax audits to reduce additionally assessed taxes (Resolutions Nos. 23/11 and 11185/10 dated 26 April 2011).

Part of VAT lawfully claimed for reimbursement must be returned by the tax authority irrespective of the other part of claim that was disputed

Pepeliaev Group advises: the Presidium of the Supreme Arbitration Court developed a legal position whereby the part of VAT that has been lawfully claimed back by the taxpayer shall be returned upon completion of the audit irrespective of whether the auditors have any objections to the other part of VAT claimed back by such taxpayer (Resolution No. 14883/10 dated 12 April 2011).

Procedure for raising electronic VAT invoices approved

Pepeliaev Group advises that on 25 May 2011, the Russian Ministry of Justice registered the Ministry of Finance’s Order No. 50-n dated 25 April 2011. This Order approves the Procedure for raising and receiving VAT invoices electronically using telecommunications channels and applying digital electronic signatures (the “Procedure”). The Procedure came into force on 3 June 2011.

Interest on a late refund of VAT is assessed disregarding the date on which the taxpayer applied for a refund of the tax in question Pepeliaev Group advises that on 24 April 2011, the Russian Supreme Arbitration Court published on its official website Resolution No. 14233/10 of the Court’s Presidium dated 17 March 2011. The Resolution considered the issue of the payment of interest on a late refund of VAT (clause 10, article 176 of the Russian Tax Code) in cases in which a taxpayer who has submitted a tax return declaring an amount of VAT to be refunded has not applied to the tax authority for the tax in question to be refunded.