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02 February 2018
At the end of 2017, a number of amendments to the Tax Code (Federal Law 340-FZ of November 27 2017) came into force which significantly increased the scope of information and documents that Russian divisions of some international companies must submit to the tax authorities. Through the amendments, Paragraph 13 of the Base Erosion and Profit Shifting Action Plan concerning the provision of country-by-country reporting was implemented into national tax legislation.
The new rules apply to groups of companies whose consolidated revenues for the relevant accounting period exceed:
For the purposes of Federal Law 340-FZ, an 'international group of companies' is a group of organisations or structures not connected through ownership or control which fulfils the following conditions:
Russian companies and foreign companies subject to taxation in Russia must now provide a notice of participation in an international group of companies and so-called 'country information', comprising:
Global documentation should be submitted by taxpayers (ie, Russian organisations or Russian tax-resident foreign organisations) which are the parent companies of the relevant international groups of companies. However, if the Russian tax authority can obtain global documentation within an international automatic exchange of information from the competent authority of the parent company's tax-resident state, the parent company should not provide the global documentation to the Russian tax authority.
The country report should contain financial and economic performance indicators of the group of companies, including:
The global documentation should contain descriptions of the group's ownership structure and core business processes.
The national documentation should contain information on controlled transactions with foreign counterparties carried out by the group's members.
Federal Law 340-FZ is general in nature and fails to answer a number of specific questions. However, it states that the Federal Tax Service will provide detailed information on the required documentation and the procedure for its preparation and filing.
The new rules have already entered into force and will apply to financial years which began in 2017. For such periods, the first reports should be submitted before the end of 2018. The first national documentation should be submitted for transactions made in 2018. A transition period has been envisaged for 2018 to 2019, for which financial penalties will not be applied for violations of the deadlines or the procedure for filing these reports.
For further information on this topic please contact Valery Narezhniy at Gorodissky & Partners by telephone (+7 495 937 6116) or email (email@example.com). The Gorodissky & Partners website can be accessed at www.gorodissky.com.
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