The update was published on June 15, 2023 and comes into force on July 1, 2023. The new version of the blacklist is composed of 91 states (40 before the update) most notably including USA, United Kingdom, Japan, France, Germany, Finland, etc.

The update leads to several negative consequences for taxpayers:

  1. Russian companies with interest owned by foreign companies from blacklisted jurisdictions are not allowed to get small and medium enterprise (SME) status.
  2. Third-party transactions with companies registered in blacklisted jurisdictions are subject to transfer pricing (TP) control. However, if the annual aggregate income from the transactions with one company does not exceed 120M RUB, the transactions are exempt from TP control.
  3. Russian companies are not allowed to use zero tax rate on dividends from the subsidiary registered in blacklisted jurisdictions.
  4. Russian companies are not allowed to use reduced rates on income from sales of interest in foreign companies from blacklisted jurisdictions.
  5. Russian companies are not allowed to use the income tax exemption on gifted property from foreign subsidiary registered in a blacklisted jurisdiction.
  6. Income of controlled foreign company is not exempt from taxation if holding or sub-holding company is registered in a blacklisted jurisdiction.

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