Taxes: significant changes
A deoffshorisation law was adopted
The deoffshorisation law was adopted in November 2014.
It is effective from 1 January 2015 and includes:
• Controlled foreign companies (CFC) rules;
• Updated tax residency rules for legal entities;
• A "beneficial ownership” concept;
• Updated rules on taxation of indirect sales of immovable property located in Russia.
Tax manoeuvre law was adopted
The major amendments under the law are as follows:
• Shifting the tax burden in the oil and gas industry. Export customs duties on crude oil and petroleum products have been reduced while export duties on fuel oil and the Mineral Resources Extraction Tax (MRET) on oil have been increased. The procedure for calculating the MRET on gas and gas condensate has been adjusted.
• Increase of tax on dividends. The tax rate for dividend income has been increased from 9% to 13% for both individual tax residents and Russian legal entities. The 9% rate does not apply starting from 2015. The law also eliminates the 30% penalty rate on dividends payable on the shares of Russian issuers recorded through depositary programmes and other accounts of foreign intermediaries.
• Updated property tax exemption. Starting from 2015, property tax is not charged on:
– fixed assets included in the first or second depreciation groups (equipment used for up to three years);
– movable property entered into a company’s books since 1 January 2013 as fixed assets, except for property obtained as a result of (1) reorganisation or liquidation of legal entities; or (2) transfer or acquisition from related parties.
The list of Russian taxes has been complemented with a trade levy
A new chapter on a trade levy was included into the Tax Code. It will apply in Moscow effective 1 July 2015. The Moscow levy rates are differentiated for three of the city’s areas (taxpayers engaged in retail operations in the Central Administrative District will pay the most, while those operating outside of the MKAD Ring Road will pay the least).
The levy rates are specified for the following activities performed in Moscow:
• Trade through a stationary distribution network with no sales areas (except for gas stations) and non stationary distribution network;
• Delivery and peddling retail;
• Trade through a stationary retail network (with retail space of up to 50 sq. m. and over 50 sq. m.);
• Organisation of retail markets. For example, a store with a retail area of 1,000 sq. m. located in the city's Central Administrative District will pay RUB 430,000 annually.
The trade levy is deducted from profits tax, PIT or tax paid under a simplified taxation regime (depending on the type of income tax paid by the taxpayer). So, the total tax burden may stay the same for taxpayers with a sufficient amount of income tax. The levy will not be charged on warehouse and online sales in Moscow.
Significant changes expected in the near future
On 4 December 2014, President Vladimir Putin delivered his annual state-of-the-nation address to the Russian Federal Assembly. He proposed to freeze current tax rules for the next four years. With that said, the following initiatives will probably be introduced:
- Tax holidays for greenfield projects;
- Full amnesty for capital repatriated to Russia;
- Further enhancements to CFC rules.