Corporate Tax, Gorodissky & Partners updates
Russia
Contributed by Gorodissky & PartnersNew approach to differentiation of intragroup service and shareholder activity expenses
- Russia
- 02 April 2021
In recent years, intragroup services provided by foreign parent companies to their Russian subsidiaries have come under scrutiny. As such, a shareholder activities test was added to the tax audit process in order to identify profit distribution disguised as service fees. To clarify the authorities' approach to conducting this test, the Federal Tax Service has issued a letter which defines shareholder activities with regard to intragroup services and clarifies when intragroup services will qualify as shareholder activities.
Important changes to taxation of transactions involving property rights transfers
- Russia
- 12 February 2021
Numerous tax law amendments recently entered into force, including the introduction of a rule concerning the taxation of transactions involving the transfer and acquisition of property rights. Now, the law directly states that property rights, along with other property, are exempt from taxation. The introduction of this rule has put an end to numerous disputes between the tax authorities and taxpayers with respect to transfers of property rights between parents and their subsidiaries.
New tax system for controlled foreign corporations
- Russia
- 04 December 2020
Federal Law 368 of 11 September 2020, which could significantly simplify the tax payment process for the owners of a large number of controlled foreign corporations (CFCs) and significantly reduce such taxes in some cases, was recently adopted in Russia. It is fair to say that, in a sense, the new legislation introduces an alternative simplified tax system for CFC owners. However, the new tax regime will not be beneficial to all taxpayers.
Russia revises double tax avoidance agreements with numerous countries
- Russia
- 18 September 2020
In 2020 Russia launched an intensive process of revising its bilateral tax agreements with numerous jurisdictions. According to the Cyprus minister of finance and the Russian Ministry of Finance, significant amendments to the double tax avoidance agreement between Russia and Cyprus were agreed in August 2020. The most important amendment is the increase in the tax rate levied on the payment of dividends and borrowed money.
New tax relief for IT industry
- Russia
- 17 July 2020
President Vladimir Putin recently announced the next set of measures to amend tax legislation to help the Russian economy overcome the crisis caused by the COVID-19 pandemic. Most of the new tax changes relate to companies in the IT industry, for which a so-called 'tax manoeuvre' has been proposed in order to significantly reduce the corporate income tax rate for such companies from 20% to 3%.
