Tax Russia Legal Alert March 2016 A New Set of Amendments to the Russian CFC and Beneficial Ownership Rules According to the new tax reporting obligation introduced by the changes to the Russian Tax Code, foreign companies and unincorporated foreign vehicles that directly hold immovable property located in Russia and that are subject to property tax (the "Property Owners") must disclose their direct and indirect owners (full ownership chain including individual beneficiaries) as of December 31 of the respective reporting period. To provide a tool to perform the above obligation, the Russian Federal Tax Service issued Order No. ММВ-7-14/41@ of January 28, 2016 in which it introduced the relevant reporting form (the "Form"). The Order became effective on March 15 this year. Implications for taxpayers All Property Owners are required to submit forms that identify their direct and indirect owners along with filing 2015 corporate property tax return by March 30 this year. Property Owners who fail to perform the above obligation on time may be penalized in the amount of 100% of the property tax due with regard to the relevant immovable property; if such property is co-owned, the penalty will be pro-rated. Scope and procedure of reporting The form that must be filed by each Property Owner requires disclosing the extended scope of information on direct and indirect participants of companies (unincorporated vehicles) including names of companies/structures, addresses, percentage of direct and indirect participation, settlors and beneficiaries. The Form (either electronic or hardcopy) must be filed with the tax inspectorate at the location of the immovable property. If a Property Owner owns several properties, all Forms may be submitted with one tax inspectorate at the location of any of such properties. Foreign companies which hold shares or participatory interest in Russian companies that own immovable property are not subject to this reporting requirement. Actions to consider All Property Owners are strongly advised to ensure that they have: www.bakermckenzie.com For further information please contact Alexander Chmelev +7 495 787 27 00 firstname.lastname@example.org Sergei Zhestkov +7 495 787 27 00 email@example.com Maxim Kalinin +7 812 303 90 00 firstname.lastname@example.org Baker & McKenzie — CIS, Limited White Gardens, 10th Floor 9 Lesnaya Street Moscow 125047, Russia Tel.: +7 495 787 27 00 Fax: +7 495 787 27 01 BolloevCenter, 2nd Floor 4A Grivtsova Lane St. Petersburg 190000, Russia Tel.: +7 812 303 90 00 Fax: +7 812 325 60 13 Tax 2 Legal Alert March 2016 • reviewed the existing holding structures and have identified all foreign entities and beneficiaries in the ownership chain subject to disclosure; • considered the effects and risks of disclosing respective information to the Russian tax authorities (e. g., for transfer pricing and thin-capitalization purposes); • analyzed restructuring opportunities to reduce disclosure of sensitive information in the future (including transfer of immovable property to a Russian subsidiary). This LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties about legal developments that may affect them or otherwise be of interest. The comments above do not constitute legal or any other advice, and should not be regarded as a substitute for specific advice in individual cases.