Russia updates

Arbitration & ADR

ICAC at Russian Chamber of Commerce and Industry issues new arbitration rules
  • Russia
  • 20 July 2017

Following the reform of the Arbitration Law, most existing arbitral institutions must re-register and obtain a permit from the government to administer disputes in Russia before November 1 2017. The International Commercial Arbitration Court at the Russian Chamber of Commerce and Industry has used this opportunity to enhance significantly its previous rules governing international and domestic arbitration.


Company & Commercial

How to conduct shareholders' agreements in Russia
  • Russia
  • 01 October 2018

Since 2009 Russian law has contained express provisions on shareholders' agreements. Further provisions of the Civil Code came into effect in 2014. The law sets out what shareholders' agreements can and cannot require shareholders to do and whether they can be enforceable against third parties, as well as whether they must be publicly disclosed or registered.

Share transfers and company exits
  • Russia
  • 24 September 2018

There are a number of restrictions on share transfers in Russia which companies should bear in mind. In addition, companies should be aware of the laws regarding whether minority shareholders can alter or restrict changes to share capital structures, when shareholders must notify changes to their shareholding to a regulatory authority and whether companies can buy back their shares. A number of restrictions also exist with regard to exiting a company.

Interested party and material transactions
  • Russia
  • 19 March 2018

Transactions of Russian joint stock companies and limited liability companies require the consent of the general meeting or the board of directors if they qualify as material or interested party transactions. As the non-observance of the relevant requirements may be grounds for contesting these types of transaction, they should be observed not only by shareholders and members of the corporate bodies of the respective companies, but also by persons that wish to enter into such transactions with these companies.


Corporate Tax

Contributed by Gorodissky & Partners
FTS approves form of inquiry regarding beneficial owners
  • Russia
  • 01 March 2019

The Federal Tax Service recently approved a form of inquiry which it will use to request information from legal entities regarding their beneficial owners in order to, among other things, identify tax evasion schemes. For the purposes of the law, 'legal entities' means not only Russian legal entities, but also foreign legal entities, including those that perform economic operations in Russia and interact with Russian clients.

Price increases expected following VAT changes
  • Russia
  • 18 January 2019

The basic value added tax (VAT) rate recently increased from 18% to 20%. The new rate will apply to all goods, works and services which are sold, performed or provided from 1 January 2019. In addition, several estimated tax rates have also been amended. As entities are expected to reflect the increased VAT rate in the price of their goods, economists predict a rise in prices associated with the increase in early 2019.

FTS publishes information on taxpayer obligations and financial reporting
  • Russia
  • 02 November 2018

The Federal Tax Service recently began publishing information concerning the various obligations of Russian taxpayers (ie, legal entities) and their financial reporting on its website. This practice is new in Russia, as such information was previously classified as tax secrets and, by virtue of the Tax Code, could not be disclosed. This development is useful not only for Russian taxpayers, but also for foreign companies choosing Russian counterparties.

Tax authorities to be given access to audit documents
  • Russia
  • 21 September 2018

In January 2019 a new law will come into force enabling the tax authorities to request client-related documents from auditors which constitute 'auditing secrets'. This law marks the end of years of struggle by the tax authorities to gain access to audit documents. Although these changes carry no significant risks for bona fide taxpayers, the business community is concerned that the authorities may be able to request auditors' documents and opinions on related services, such as accounting and tax consulting.

New approach to beneficial owners of income
  • Russia
  • 17 August 2018

The Federal Tax Service (FTS) recently issued a letter providing an extensive explanation of the tax authorities' application of the beneficial owner of income (BOI) concept. This concept was previously referred to only in the international tax treaties between Russia and other states, but has recently been actively implemented into Russian tax legislation. In this regard, the FTS's letter is of great interest, as it summarises the approach of both the courts and the tax authorities with regard to resolving BOI issues.


Franchising

Making life easier for franchise operators: modernisation of legislation
  • Russia
  • 27 June 2017

In recent years, the commercial titles of the Civil Code have been aligned more closely with international commercial practices and the Russian courts have been enforcing these new standards. These improvements are noticeable in the area of franchise law. Because these statutory provisions are new, franchisors should check the latest court decisions for additional guidance before structuring transactions based thereon.


International Trade

New law entitles Russian exporters of services to deduct VAT
Gorodissky & Partners
  • Russia
  • 10 May 2019

The Duma provides certain incentives to encourage businesses to operate in Russia. For example, it recently passed a law which permits Russian exporters and Russian subsidiaries of foreign companies that provide services to foreign clients and other companies within such client's groups to deduct the full amount of value added tax for these services. The new law, which was drafted in response to the digital economy, will increase competition in the outbound services market.