Overview of legislation changes - March 2023

Overview of the most important legislation changes - March 2023
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The has included russia the blacklist jurisdictions en konsu ou

The EU has included Russia in the "blacklist" of jurisdictions. Suspension of double taxation avoidance agreements is possible.

On February 14, 2023, the Council of the European Union ("EU Council") released a press release stating that Russia has been included in the "blacklist" of non-cooperative jurisdictions for tax purposes. According to EU authorities, Russia is not striving to resolve issues related to a special regime for international companies in special administrative regions to meet the criteria of effective tax management of the European Union.

Consequences of being included in the "blacklist"

Russia's inclusion in the EU's "blacklist" means that EU member states will have the right to apply administrative and legal measures against Russia. Each EU member state must choose at least one administrative measure and one legal measure. However, the application of all measures from the specified list simultaneously is not mandatory, but may be at the discretion of the specific EU member state.

Administrative measures include:

  • Enhanced monitoring of certain transactions between EU residents and Russian entities;
  • Increased audit risks for EU taxpayers using structures or transactions involving Russian entities.

Legal measures include:

  • The impossibility of tax resident companies in EU countries to deduct expenses incurred in transactions with Russian entities for tax purposes;
  • Application of CFC (controlled foreign company) rules to EU residents who may not have previously applied these rules under national legislation;
  • Application of source taxation on income paid to Russian entities that were previously exempt from taxation;
  • Limitations on the application of the exemption rules for distributed profits received from Russian entities for EU shareholder residents.

Suspending double taxation avoidance agreements

As a retaliatory measure, the Russian Ministry of Finance and Ministry of Foreign Affairs proposed to suspend the application of the DTAs. If the proposal is supported, the application of reduced tax rates (tax exemptions) for income covered by the double taxation avoidance agreements (such as interest, dividends, royalties) will be suspended from the date of the corresponding presidential decree.

Our support

We offer the following services:

  • Analysis of risks associated with the use of restrictive measures and their legal consequences for businesses, and if necessary, assistance in developing an optimal structure for interacting with counterparties from the EU.
  • Analysis of tax consequences of possible suspension of agreements on avoidance of double taxation and development of ways to mitigate them.

Please feel free to contact us for a consultation.

Harmful and dangerous misconceptions about storing en konsu outs

4 harmful and dangerous misconceptions about storing accounting documents

From letters from colleagues and explanations from government agencies, we have identified harmful and dangerous misconceptions about document storage. In our article, we describe what accountants most often confuse.

Misconception #1. Electronic primary documents must be stored in printed form.

The law does not require printing electronic primary documents and keeping them in paper form. Tax authorities have the right to demand documents during inspections, and as a rule, certified copies (Art. 93, para. 2 of the Tax Code) must be provided. But if the document is made in electronic form, send it through a personal account or via electronic reporting system.
There are cases when it is impossible to present documents in the form in which they are made. The company has the right to issue electronic documents in any format (letter from the Federal Tax Service dated December 9, 2022, No. ZG-3-26/13861). But tax authorities can only accept documents in the form of xml files and scanned copies (tif; jpg; pdf; png).
Documents not in the format of the Federal Tax Service can be sent to the inspection in two ways. The first is to print and send on paper with a note that the document is certified by an electronic signature (letter from the Federal Tax Service dated December 11, 2017, No. ED-4-15/25048). The second - print, scan, and certify the scan with a reinforced electronic signature (letter No. ZG-3-26/13861).

Misconception #2: Paper documents can be scanned and stored in electronic form

Keep documents in the form in which they were created (para. 24 of FSBU 27/2021). Converting paper documents to electronic form is not allowed. This is confirmed by officials (letters from the Ministry of Finance dated December 28, 2022, No. 07-01-10/128798, and December 5, 2022, No. 03-03-10/118589).
Tax inspectors during an audit have the right to familiarize themselves with the originals of the documents (para. 7, clause 2, article 93 of the Tax Code). Scanned documents do not replace paper originals, even if copies are certified with an enhanced electronic signature. If a company only has scans, inspectors will disallow expenses and deductions, impose additional taxes, penalties, and fines. In addition, the company may be fined 10,000 rubles for a gross violation of accounting rules (article 120 of the Tax Code).

Misconception № 3. The storage period is considered from the date of document processing

The storage period for documents should be calculated from January 1 of the year following the year in which the document processing was completed (part 2 of article 21.1 of Federal Law No. 125-FZ of October 22, 2004, clause 4.1 of the Instruction approved by the order of Rosarkhiv No. 237 of December 20, 2019). For primary documents, the storage period should be calculated from January 1 of the year following the year in which you last used the document for calculating and paying taxes, as well as compiling reports (letter of the Ministry of Finance No. 03-07-11/45829 of July 19, 2017). The storage period for VAT registers should be counted from the date of the last entry in a special way (Government Resolution No. 1137 of December 26, 2011). Accounting and tax documents that confirm the calculation and payment of taxes should be kept for five years (subparagraph 8 of paragraph 1 of article 23, subparagraph 5 of paragraph 3 of article 24 of the Tax Code).

Documents on losses should be kept for the entire period during which you reduce the tax base of the current period due to losses (paragraph 4 of article 283 of the Tax Code). The maximum storage period is 10 years.

Documents that confirm the calculation and payment of contributions should be kept for six years (subparagraph 6 of paragraph 3.4 of article 23 of the Tax Code).

Misconception #4: It is possible to dispose of documents that do not confirm tax calculations.

It is safer to keep documents for at least five years that even indirectly confirm transactions. Tax authorities may demand additional papers to verify the reality of transactions.

Vat on electronic services provided by foreign companies to russian customers konsu consulting

VAT on electronic services provided by foreign companies to Russian customers

Electronic services provided by foreign companies in Russia are subject to VAT. In order to exercise tax control over such transactions, the tax legislation provides for the obligation to tax register foreign organizations that are providers of electronic services or intermediaries involved in settlements.Read more

Changes in VAT relief for foreign companies in 2021

From 2021 onwards, VAT relief for transfer of exclusive rights as well as rights to use software programs and databases will change as follows.Read more

Vat increase 20 what needs done en konsu outsourcing consulting

VAT increase up to 20%. What needs to be done?

The VAT rate will increase from 18% to 20% from January 01, 2019. Transactions (sale of services, goods or work performance) which used to be taxed at 18% will be taxed at 20% from January 01, 2019.Read more