Gorodissky & Partners updates

New approach to differentiation of intragroup service and shareholder activity expenses
Gorodissky & Partners
  • Corporate Tax
  • 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
Gorodissky & Partners
  • Corporate Tax
  • 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 regulations for processing publicly available personal data
Gorodissky & Partners
  • Tech, Data, Telecoms & Media
  • Russia
  • 29 January 2021

A new law is set to introduce amendments to the existing regulations concerning publicly available personal data. The law introduces the new notion of 'public personal data' and sets out the data processing aspects relating to such data. It also concerns the protection of personal data which is made publicly available and deals with particular situations where data users have published information about themselves, resulting in the dissemination of such data by other persons.

Newly proposed amendments to data processing operations
Gorodissky & Partners
  • Tech, Data, Telecoms & Media
  • Russia
  • 11 December 2020

A recently introduced draft law aims to clarify the Personal Data Law's data processing procedures. If the draft law is adopted into law, businesses acting as data operators will need to review their data protection documents (ie, consent documents), technical security measures and data processing activities and revise them to be compatible with the proposed amendments and the Federal Service for Supervision of Communications, Information Technology and Mass Media's requirements.

New tax system for controlled foreign corporations
Gorodissky & Partners
  • Corporate Tax
  • 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
Gorodissky & Partners
  • Corporate Tax
  • 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
Gorodissky & Partners
  • Tech, Data, Telecoms & Media
  • 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%.

New tax relief for IT industry
Gorodissky & Partners
  • Corporate Tax
  • 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%.

New rules and procedures for blocking mobile apps distributing pirated content
Gorodissky & Partners
  • Tech, Data, Telecoms & Media
  • Russia
  • 10 July 2020

Recent amendments to the Information Law aim to tackle the issue of mobile apps and e-platforms that distribute pirated content which infringes copyright and related rights. This article examines upcoming amendments and highlights the new enforcement possibilities that will be available to rights holders in Russia. The changes will also be relevant for businesses that own and operate mobile apps, which should consider the associated risks if their mobile apps contain pirated content.

Draft Big Data law provides clues of what to expect
Gorodissky & Partners
  • Tech, Data, Telecoms & Media
  • Russia
  • 08 May 2020

Although the term 'Big Data' is now common, no Russian legal provision deals expressly with the processing of such data. Various legislative initiatives have attempted to introduce a specific legal framework in this regard, including a recent draft law which aims to create a specific legal regime for Big Data processing. Although the draft law received negative feedback from the government, it is useful to consider the Ministry of Digital Development, Communications and Mass Media's approach when shaping it.

Tax measures to support businesses during СOVID-19 pandemic
Gorodissky & Partners
  • Corporate Tax
  • Russia
  • 01 May 2020

The COVID-19 pandemic and the measures taken to combat it will have a significant impact on both the global and Russian economies. The government has taken a number of measures to stop the spread of the virus, such as suspending the activities of most Russian businesses, including service providers, from 27 March until 30 April 2020. As such, the government has also had to adopt a comprehensive support programme for affected businesses.

Calculating share of Russian immovable property for corporate income tax purposes
Gorodissky & Partners
  • Corporate Tax
  • Russia
  • 21 February 2020

At the end of 2019, the Federal Tax Service issued clarifications on calculating the share of Russian immovable property in the indirect sale of such property for corporate income tax purposes. The clarifications are especially relevant as the Russian tax authorities' powers have grown following the signing and ratification of a number of international agreements on the exchange of tax information in recent years.

Regulator clarifies key aspects of trademark use in keywords
Gorodissky & Partners
  • Tech, Data, Telecoms & Media
  • Russia
  • 13 December 2019

Keywords play an important role in e-marketing. After typing a specific product name, company name or brand in a search engine, potential customers and users may view specific offers and data, including ads. Further, the list of offers may represent certain keywords selected by an advertiser. Unsurprisingly, the selection and reproduction of designations as keywords can trigger various trademark use concerns that inevitably lead to enforcement issues.

Main changes to company taxation in 2020
Gorodissky & Partners
  • Corporate Tax
  • Russia
  • 13 December 2019

Over the past year, Parliament has adopted several laws amending the Tax Code regarding the taxation of legal entities. This article examines the most significant tax innovations expected in the corporate sector in 2020 which concern corporate income tax, transport and land taxes and changes in tax administration rules.

Russia ratifies MLI
Gorodissky & Partners
  • Corporate Tax
  • Russia
  • 19 July 2019

Federal Law 79-FZ on the Ratification of the Multilateral Convention to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting recently entered into force. Once the ratification procedure has been completed, the convention will enter into force in Russia, introducing changes to the taxation procedure for transactions with counterparties from a large number of countries that have concluded double tax avoidance agreements with Russia.

Federal Anti-monopoly Service clarifies role of online messenger systems in advertising
Gorodissky & Partners
  • Tech, Data, Telecoms & Media
  • Russia
  • 12 July 2019

Advertisers are increasingly using online messenger systems to promote businesses, as well as their goods and services. In this context, the Federal Anti-monopoly Service recently issued an official letter clarifying, among other things, the application of the Federal Law on Advertising to messenger systems such as Viber and WhatsApp. The letter is notable as it reveals the regulator's approach to advertising campaigns disseminated via various instant messaging services.

New law introduced to regulate digital rights
Gorodissky & Partners
  • Tech, Data, Telecoms & Media
  • Russia
  • 17 May 2019

The president recently signed the Digital Rights Law, which will take effect on 1 October 2019. The law has introduced a number of new legal concepts into Russian legislation, including digital rights, e-transactions, smart contracts and Big Data. Companies doing business on the digital level in Russia should familiarise themselves with the background and key provisions of the law to ensure that they are ready to operate in the new legislative environment.

Russian authorities apply GDPR-style rules to web analytics
Gorodissky & Partners
  • Tech, Data, Telecoms & Media
  • Russia
  • 01 March 2019

Roscomnadzor (the Russian data protection authority) recently filed a landmark action against illegal personal data processing by Google Analytics and Yandex Metriсa. If the authority succeeds in the appeal court, Russian websites will have to welcome users with EU General Data Protection Regulation-style cookie banners and privacy policies. Prior to this case, the Russian internet community had not considered statistical information concerning web traffic and user actions to constitute personal data.

FTS approves form of inquiry regarding beneficial owners
Gorodissky & Partners
  • Corporate Tax
  • 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
Gorodissky & Partners
  • Corporate Tax
  • 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.

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