Tax Russia Legal Alert April 30, 2016 New Amendments to Part One of the Russian Tax Code: Obtaining Tax Rulings for Proposed Transactions, New Procedure of Appealing Decisions of the Russian Tax Authorities, Electronic Submission of Documents during a Chamber Tax Audit for VAT On April 27, 2016, the Federal Assembly of the Russian Federation approved the Law "On amendments to Part One of the Tax code of the Russian Federation" that introduces a procedure for requesting and obtaining a reasoned opinion from Russian tax authorities on the tax implications of proposed transactions ("reasoned opinions" or "tax rulings"), stipulates that documents be submitted electronically during chamber VAT tax audits, and introduces amendments to the procedure for appeals against decisions of tax authorities (the "Law"). Implications for taxpayers Taxpayers applying the tax monitoring regime will now have the opportunity to discuss with Russian tax authorities the tax implications of proposed transactions (in addition to past transactions) and to obtain a tax ruling that is binding for both taxpayer and Russian tax authorities. At the same time, the taxpayer shall retain the right to challenge the tax ruling by filing an objection with the Russian tax authorities. What the Law says 1. Expansion of tax ruling mechanism (for taxpayers applying the tax monitoring regime) The Law extends the procedure for obtaining a tax ruling with regard to proposed transactions to taxpayers who are applying the tax monitoring regime1 ("qualifying taxpayers"). This will provide the qualifying taxpayers with the opportunity to discuss with Russian tax authorities the tax implications of proposed transactions in advance. Currently, qualifying taxpayers may request and obtain a tax ruling only in respect of past economic events. The Law provides an indicative list of information that should be included in a request for a tax ruling ("Request") and the supporting documents that should 1 This regime is available for taxpayers who meet all of the following criteria: (1) the gross amount of VAT, excise, corporate profit tax and mineral extraction tax for the previous year exceeds 300 million rubles, (2) income stated in financial statements exceeds 3 billion rubles, (3) asset value exceeds 3 billion rubles. 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 April 2016 be attached to such Request. The Request should state the business objective and the main provisions of the proposed transaction, information on the business activities of the parties to the transaction, as well as other information relevant to the calculation of taxes. When applying a tax monitoring regime, the tax ruling will be binding for both Russian tax authorities and the taxpayer. Exceptions are stipulated by the Law for cases when such tax ruling is based on incomplete or inaccurate information provided by the taxpayer, or on regulations that have been repealed. Also, the taxpayer retains the right to contest the tax ruling by filing an objection with the Russian tax authorities. The Law does not strictly clarify whether the tax ruling is binding for the tax authorities outside the scope of the tax monitoring regime (e.g., during a tax audit). However, we believe that this procedure for obtaining tax rulings may become available to broader categories of taxpayers in future. 2. Taxpayers may now participate in appeal hearings held by a higher tax authority Under the Russian Tax Code in effect, higher tax authorities investigate and consider appeals without the presence of the taxpayer. The Law grants a taxpayer the right to participate in an appeal hearing by a higher tax authority in cases where (i) there are inconsistencies in documents provided by the lower tax authority whose decision is being challenged by the appeal, or if (ii) there are contradictions between the documents provided by a lower tax authority and the documents filed by the taxpayer challenging the decision. 3. Electronic submission of documents during a chamber tax audit The Law introduces an electronic procedure for the submission of supporting documents during a chamber tax audit in respect of VAT tax returns, for taxpayers who file VAT returns via electronic channels. The submission of supporting documents in paper form in response to a request made during a chamber tax audit will no longer be admissible. Actions to consider • consider the opportunity to obtain a tax ruling in respect of proposed transactions under tax monitoring regime; • be ready to file supporting documents in electronic form in case of a chamber VAT tax audit; • analyze ongoing appeals in respect of decisions made by the tax authorities, and consider the possibility of participating in an appeal hearing. We will continue to inform you about subsequent amendments to Russian tax legislation. This LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.
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New Amendments to Part One of the Russian Tax Code: Obtaining Tax Rulings for Proposed Transactions, New Procedure of Appealing Decisions of the Russian Tax Authorities, Electronic Submission of Documents during a Chamber Tax Audit for VAT
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