LT Digest Be in the Know

Tax & Legal 8 - 14 June 2020

President of Russia signs package of bills into federal laws Russian State Duma considers package of bills Process manufacturing strategy until 2024 and 2035 approved Energy sector strategy until 2035 approved Far East Development Ministry proposes opening Arctic shelf for private investors Updated bill on national budgetary, fiscal, customs tariff priorities released Temporary rules for supplying medicines for COVID-19 in force as of 5 June 2020 Event cancellation refund period extended Government eases country entry/exit restrictions Cloud database for urban developers Terms of soft loans for systemically important enterprises updated Professional income tax introduced in two more regions Owners of commercial property in Moscow can apply for grants starting from 15 June 2020 Moscow lifts lockdown restrictions starting from LT Digest 9 June 2020 Tax payment deferrals granted in St Petersburg Rent deferral to be granted to all Saint Be in the know Petersburg businesses regardless of economy Legislative initiatives sector Federal Customs Service to ease customs President of Russia signs package of bills into clearance for business and provide support to federal laws exporters The following federal laws were signed off: MinFin comments on taxation of leasing • Federal Law No. 166-FZ of 8 June 2020 on new payments made by Russian company to measures aimed at ensuring economic resilience Japanese resident under international equipment during the pandemic lease contract • Federal Law No. 172-FZ of 8 June 2020 on tax Ministry of Construction: accrual and collection stimulus measures amid the COVID-19 outbreak of penalties for late payment of housing, utilities, overhaul fees suspended until 1 January 2021 • Federal Law No. 171-FZ of 8 June 2020, entitling sanctioned individuals to unilaterally change the Taxpayers to check eligibility for tax exemptions jurisdiction of civil disputes to Russia for Q2 2020 via special tool launched by Federal Tax Service • Federal Law No. 168-FZ of 8 June 2020, regulating the creation of a federal population database Online filing of tax and accounting reporting to be piloted until 1 July 2021 • Federal Law No.169-FZ of 8 June 2020, extending government stimulus measures for the SMEs to BAT conformity certificates for medical drugs self-employed individuals manufacturers prolonged Bill cancelling input VAT on precious metals • Federal Law No. 182-FZ of 8 June 2020, developed streamlining the registration of immigrants Ministry of Finance refuses to forgive VAT on • Federal Law No. 179-FZ of 8 June 2020, missing rent payments streamlining the extraction of associated non- hydrocarbon minerals • Federal Law No. 177-FZ of 8 June, which permits Cable and telecom equipment might be treated blocking applications that use pirated content, as movables starting from 1 October 2020. Chamber of Industry and Trade proposes Official Internet Portal for Legal Information property tax exemption for mothballed or overhauled property Import duties for pharmaceutical substances Russian State Duma considers package of bills might be zeroed In particular, the package included Bill No. 961114-7, President orders development of stimulus according to which small and medium-sized businesses measures for telecom and IT companies from the distressed industries may be allowed to pay judgement debts in installments without petitioning the Proposal to make COVID-19 testing expenses court. deductible Mandatory labelling of pharmaceuticals, Official Website of the Russian State Duma footwear, cigarettes not to be postponed MinTrud drops idea of special termination rules Process manufacturing strategy until 2024 and during epidemic 2035 approved Russian Chamber of Commerce proposes single The following targets are set for 2024: rules for non-tax payments • to increase the number of innovation companies to 50 Moscow companies will receive COVID-19 testing percent of the total industry players subsidies • to increase digitalisation expenditure to 5.1 percent of Commercial Court of Moscow comments on use gross value added of beneficial income ownership concept for dividends paid to Luxembourg shareholders • to ensure growth of productivity at medium-sized and large enterprises at an annual rate of five percent or Sixth Arbitration Court of Appeal: recognition of higher losses from transactions in derivatives for tax accounting purposes • to ensure industrial exports of at least USD 205 billion per year, including engineering products worth USD Eurasian Economic Commission approves plan of 60 billion per year. action to combat COVID-19 spread in EAEU The document also discusses in detail the development priorities for such sectors as aviation, shipbuilding, electronic, medical, automotive, transport and agricultural engineering, and the chemical/petrochemical complex. Implementation of the strategy must result in the growth of industry production index to 116 percent by 2024 and 192 percent to 2035 (vs. 2019). Official website of the Russian Government

Energy sector strategy until 2035 approved The sector’s strategic goals include fostering the country's social and economic development, strengthening and preserving its position in the global energy market. Key objectives include satisfying the domestic demand for energy resources, developing exports, modernising and increasing accessibility of infrastructure, attaining technological independence, completing digital transformation, and ensuring energy security. By 2024, outreach of natural gas supply lines in the regions is expected to grow from 68.6 to 74.7 percent, and by 2035 – to 82.9 percent. A 5–9 percent increase (vs. 2018) in energy production and 9–15 percent – in energy exports is expected by 2024. Investments in the industry must grow by 1.35–1.4 times.

2 The strategy focuses on expanding gas transportation Russian manufacturers and importers of anti-COVID-19 infrastructure in Eastern Siberia and the Far East, medicines must submit to the Ministry of Healthcare developing liquefied natural gas production capacities, and the Ministry of Industry and Trade a weekly and ensuring stability of the country’s energy sector. supplies distribution plan, listing requests for medicines from pharmacies and regional authorities. Special emphasis is made on mitigating the industry's negative environmental impact. The requests must indicate the name and the dosage form of the drug, the recipient medical organisation, the Official website of the Russian Government volume and time of supplies, and the number of suspected and confirmed COVID-19 cases. Far East Development Ministry proposes opening The temporary rules will apply until 1 January 2021. Arctic shelf for private investors Official website of the Russian Government A bill to that effect has been posted on the Federal Draft Legislation Portal. Event cancellation refund period extended Both Russian and foreign companies may be admitted to the Arctic and Pacific shelves, starting from 2021. According to the existing regulations, ticket refunds in case of event cancellation or postponement must be Exploration and mining rights will be granted to legal made in full within 30 days following the ticket holder’s entities, including foreign companies and their request. The new rules extend the period to 180 days. subsidiaries, registered in a region that is part of the Russian Arctic or Far Eastern territories. In case of postponement, the event organiser may now offer the ticket holder a choice between attending a The earlier distributed shelf areas will not be affected. rescheduled event using the original ticket or The Government will be represented by an agent exchanging the ticket for a voucher. company, which will work in a consortium with other If the event organiser has not determined and stakeholders interested in developing the shelves. announced the new date of the rescheduled event The functions of such Government’s agent can be within six months following the lifting of the state of carried out either by an organisation that is wholly high alert, the event will be deemed cancelled subject owned by the Russian Federation, by the Institute for to the full ticket or voucher refund. the Development of the Far East and the Arctic, or a It was also established that the voucher may be wholly-owned subsidiary of VEB.RF. exchanged for a ticket, subscription or voucher (e- Federal draft legislation portal voucher) entitling the holder to attend the rescheduled event on the terms comparable to those of the original ticket, subscription or voucher, or have the ticket Updated bill on national budgetary, fiscal, customs upgraded at no extra charge. tariff priorities released The document also sets the deadlines for requesting a The following changes are proposed: refund. • to disable the use of zero-rated CIT for dividends Official website of the Russian Government payable to a foreign entity, where the beneficial owner of such dividends is a Russian tax resident, as part of the look-through approach. Government eases country entry/exit restrictions If the amendments are passed, such dividends will Russian citizens can now leave the country to visit close be taxed at a 13-percent rate relatives living abroad and are in need of care. • to exclude the provision that equals the treatment of The same applies to trips for medical, business or indirect and direct shareholders of a Russian educational purposes. company as part of the look-through approach Foreign nationals will be able to enter the country on • to exclude the provision entitling foreign entities that similar terms: for medical purposes or to attend to sick voluntarily assume Russian tax residency to apply relatives. the zero CIT rate on dividends received Official website of the Russian Government • to clarify the use of adjusting coefficients in the CIT calculation formula for dividends as per Article 275 of the Russian Tax Code. Cloud database for urban developers To remind, the bill ‘On amendments to Parts I and II of The pilot of a cloud-based urban development data the Russian Tax Code (as regards the implementation of management system might run between 1 July 2020 to certain priority provisions of the national budgetary, 1 December 2022, its key stakeholders being the fiscal, and customs tariff policy)’ was published on the Ministry of Communications and Media, the Ministry of draft legislation portal in mid-May. Economic Development, Rosreestr, and the regional/municipal authorities. Federal draft legislation portal Federal draft legislation portal

Temporary rules for supplying medicines for COVID-19 in force as of 5 June 2020 Mikhail Mishustin signed a decree approving interim distribution rules for medical drugs acceptable for use in treatment of COVID-19.

3 Terms of soft loans for systemically important - the multi-functional immigration centre of Moscow enterprises updated - vet clinics (for non-emergency assistance) Soft loans can be used by such enterprises and their - recruiting agencies. affiliates for a closed list of purposes. Theatres, concert facilities and circuses may resume The changes will permit using soft loans to guarantee rehearsals (admission of audience is still prohibited). the discharge of obligations arising from VEB RF’s performance under its suretyship, including the Restrictions are lifted for: payment of pledge valuation charges and/or surety/guarantee fees to the guaranteeing bank or the • organisations (individual entrepreneurs) engaged in surety. the production of films/videos, sound recording, professional and research activities The document also regulates redistribution of loan limits among affiliated borrowers. • educational facilities Consultant Plus • car-sharing services, pre-ordered passenger transfer and full-scope taxi services • digital passes are cancelled Professional income tax introduced in two more regions • official public events are resumed. This tax regime will now be available in: Businesses re-opening since 16 June 2020: • the Republic of Tyva • cafés with outdoor seating • Ulyanovsk Region. • libraries, museums, exhibition halls, and zoos subject to e-ticket and simultaneous visitors Official Internet Portal for Legal Information restrictions • dental clinics Owners of commercial property in Moscow can • companies (individual entrepreneurs) engaged in apply for grants starting from 15 June 2020 real estate, rent, leasing, legal, accounting, advertising, market surveying, surveying of real Interactive application forms must be completed and estate filed via the Moscow’s investment portal along with the required supporting documents. • sports events with the overall number of attendees not exceeding 10 percent of the total capacity of a An order approving the application format and sports facility. completion instructions has been posted on the portal. Businesses re-opening since 23 June 2020: The interactive form will be available from 15 June 2020. • gyms, swimming pools Applications from owners of shopping malls exceeding • restaurants, cafes, canteens, buffets, bars, snack 1,000 sqm will be considered by the Moscow bars and other food service establishments, including Department of Commerce and Services; requests from in the parks, spas, massage salons, solariums, and food and consumer services and other commercial saunas facilities – by district prefectures, from hotels – by the Tourism Committee. • water transport Eligibility checks will be performed within 20 business • pre-school facilities (on a full-scope basis). days. The term can be extended if additional documents The use of urban infrastructure, including playgrounds, or information are required. sports grounds, and other public use facilities will also Signing a contract with the recipient will take another be permitted. five business days. Consultant Plus To remind, Moscow offers grants to owners of shopping facilities and hotels in compensation of property and land taxes. Tax payment deferrals granted in St Petersburg Official web site of Moscow’s Economic Policy and Governor Aleksandr Beglov signed an order deferring Development Department advance payments towards corporate property tax and land tax for businesses and profit tax for individuals/individual entrepreneurs that granted rent Moscow lifts lockdown restrictions starting from 9 deferral to tenants of the retail properties they own. June 2020 Owners of properties where hospitality, health resorts, Starting from 9 June 2020, the following activities can and temporary residence facilities are located will have be resumed: their advance payments towards corporate property tax and land tax for Q1 2020 deferred for six months and • outdoor walks and exercise, including for 65+ for Q2 2020 – for four months, one of the key seniors conditions being rent deferral and/or at least 50-percent rent reduction granted to tenants. • visits to: -beauty salons, photo services 4 The list of qualifying taxpayers will be put together and oriented non-profits. submitted to the tax authorities by Saint Petersburg Another proposal is to double the deferral: currently, Government’s Committee for industrial policy, 100 percent of rent for the period from 13 March 2020 innovations, and trade and Committee for the until the end of the high alert regime and 50 percent of development of tourism. rent for the remaining period can be deferred. The new Official Internet portal of legal information resolution might offer deferral of 100 percent of the rent for the SMEs and non-profits for the whole duration of the relief measure, from 13 March 2020 until 1 Rent deferral to be granted to all Saint Petersburg October 2020. businesses regardless of economy sector Official Internet site of Saint Petersburg city A city government resolution to that effect has been government prepared. If adopted, this resolution will grant rent deferral to all SMEs registered in the SME Register as of 13 March 2020. A deferral/payment in installment arrangement might also be offered to all socially

Regulatory clarifications

Federal Customs Service to ease customs Recovery of penalties that were accrued before such clearance for business and provide support to date but have not been sought in court by creditors is exporters suspended. The FCS plans to: Consultant Plus • implement the ‘customs monitoring’ regime, similarly to the tax monitoring regime Taxpayers to check eligibility for tax exemptions • pilot the automatic confirmation of zero-rated VAT on for Q2 2020 via special tool launched by Federal goods exported by post Tax Service • open one-stop services centres for exporters Available exemptions will be displayed after a taxpayer enters its taxpayer ID (INN) and selects the applicable • further develop e-declaration centres and customs tax regime at the portal. clearance automation. Official website of the Russian Federal Tax Service Official web-site of the Russian Customs Service

Online filing of tax and accounting reporting to be MinFin comments on taxation of leasing payments piloted until 1 July 2021 made by Russian company to Japanese resident under international equipment lease contract Specialised software is currently used to file reporting via the Internet-site of the Federal Tax Service in a pilot According to the ministry, based on Article 7 of the mode. Russia-Japan DTT, such payments are not taxed in Russia, unless the Japanese company’s activities create Conslutant Plus a permanent establishment in Russia. Garant:Prime BAT conformity certificates for medical drugs manufacturers prolonged Ministry of Construction: accrual and collection of Validity period of certificates that expired or will expire penalties for late payment of housing, utilities, from 15 March 2020 to 31 December 2020 will be overhaul fees suspended until 1 January 2021 extended by 12 months. After Government Resolution No. 424 of 2 April 2020 Consultant Plus entered into force, residential property managers and utility companies are not entitled to charge or seek recovery of penalties, accrued before this resolution’s effective date, via the authorised government authorities.

5 Media Review

Bill cancelling input VAT on precious metals Key Areas of the Fiscal Policy for 2021 and the Planning developed Period of 2022 and 2023. The document is expected to be submitted to the The Head of the Chamber reminded that the current Russian State Duma in mid-June 2020. provisions of the Russian Tax Code mandated the payment of corporate property tax on fixed assets that Izvestiya had been mothballed for over three months or had been modernised for over 12 months. Ministry of Finance refuses to forgive VAT on Considering that such assets are not used in income- missing rent payments generating activity and are non-depreciable for the CIT purposes, paying corporate property tax on them is not On 3 April 2020, the Government recommended that economically justified and creates an extra burden for landlords grant rent relief to distressed small-sized the taxpayers. businesses until 1 October in exchange for land, property, personal income, and some other tax benefits. Tass News Agency However, VAT on such rent, accrued but unpaid, is still due from the landlords, as it is shown on the tax return regardless of payment receipt. Import duties for pharmaceutical substances might be zeroed One of the proposed solutions was to switch to cash- based tax payments; however, the initiative was Chairman of United Russia Sergey Neverov called for declined by the Ministry. In its opinion, if landlords are zeroing import duties and VAT on pharmaceuticals permitted to pay VAT on a cash basis, tenants must be having no equivalents in Russia. disallowed to reclaim the tax (businesses may reduce According to Deputy Chairman of United Russia Andrey the tax base by the VAT amount included in the cost of Isaev, the proposal is already pending consideration by acquired goods or services, including rent), otherwise the Government. one of the parties will be prejudiced, the integrity of the taxation system violated, and the budget fall short. Kommersant Furthermore, cooperative landlords’ losses are compensated through other preferences. President orders development of stimulus Nevertheless, the Ministry of Finance does not brush off measures for telecom and IT companies the issue and keeps searching for an optimal solution, seeing the major risk in landlords’ paying VAT on rent Following a meeting on the development of the they will never get as tenants move out. communications and IT industry, the Government was tasked with “carefully analysing all proposals voiced by Izvestiya the business”, preparing a comprehensive industry support plan and integrating the required measures in the nationwide economic recovery plan. Cable and telecom equipment might be treated as Special emphasis must be placed on: movables • preparing a solution for a comprehensive tax The Ministry of Communications and Media supported maneuver that would foster the development of IT amendments to the Federal Law “On Communications” that formalise classification of cables as movables, not • boosting the development of high-potential requiring public registration. information technologies and expediting the enactment of a law on experimental regulatory The amendments were lobbied by the Digital Economy framework Committee of the Russian Union of Industrialists and Entrepreneurs, reflecting concerns of the business • accelerating the development and approval of the community over telecom equipment and cables being federal AI development project increasingly treated as immovable property for tax purposes. • compensating the revenue shortfall through government contracts Classifying cables as real estate will cause operators to pay tens of billions roubles in taxes: from 2019, • preparing proposals for creating a comfortable corporate property tax has been charged on immovable business environment for the industry. property only. RBC The current version of the Federal Law “On Communications” does not expressly treat cables as movable property. Proposal to make COVID-19 testing expenses deductible Kommersant In his letter to Minister of Finance Anton Siluanov, Alexey Popovichev, Executive Director of the Russian Chamber of Industry and Trade proposes property Association of Branded Goods Manufacturers tax exemption for mothballed or overhauled (“Rusbrand”) asked if coronavirus test expenses were property deductible for tax purposes. The proposal calls for formalising the exemption in the 6 A one-off test of 10 percent of staff mandated by Mayor Another remaining proposal is the deferral of vacation Sergey Sobyanin costs to a Moscow plant nearly RUB fare and baggage fee compensation (internal travel 1.7 million; for large enterprises, the expenditure may only) for those working in the Far North; if not used in reach RUB 5 million. 2020 due to the epidemic-related travel restrictions, it will be deferred to 2021. The existing regulations do not expressly permit deduction of such testing expenses. RBC According to amendments to the Russian Tax Code of 22 April 2020, expenses for the purchase of medical Russian Chamber of Commerce proposes single supplies, protective equipment, and office disinfection rules for non-tax payments are deductible. Head of Russian Chamber of Commerce and Industry In this regard, the Ministry of Finance was requested to Sergey Katyrin has voiced the proposal to set up unified clarify if businesses were allowed to deduct the costs of rules for introducing and modifying non-tax payments. testing employees for coronavirus, and if not, initiate amending the tax legislation accordingly. This initiative has been included into draft Fiscal Policy Roadmap For 2021 And Planning Period of 2022–2023 The Russian Union of Industrialists and Entrepreneurs, as a measure to support development of industry, in turn, asked Rospotrebnadzor to constrain test prices import replacement, and demand. charged by accredited laboratories. A framework legislative act is envisaged, banning non- Kommersant tax payments not on the official lists and registers, and exclusively authorising the appropriate government bodies to introduce new ones within their powers set in Mandatory labelling of pharmaceuticals, footwear, the federal legislation. cigarettes not to be postponed Other proposals include: The Government sees no reasons for postponing the introduction of mandatory labelling requirements. • postponing the cancellation of the single imputed income tax from 2021 to 2024 The distribution of unlabelled products from the above- mentioned categories will be prohibited as of 1 July • abandoning consideration of increasing the MET rate 2020. for coal. Izvestiya TASS Information Agency

MinTrud drops idea of special termination rules Moscow companies will receive COVID-19 testing during epidemic subsidies The Ministry of Labour amended the draft Russian According to Deputy Mayor Anastasia Rakova, the city Government Resolution ‘On peculiarities of legal government will be financing COVID-19 tests for regulation of labour and other associated relations in employees of Moscow companies. Employers can sign 2020’, removing most of its earlier initiatives, including up with any medical provider listed on the website of the ban on idling or terminating employees during the the city government’s health protection department, epidemic-related suspension of operations at the starting on 11 June. employer’s initiative, as well as the new procedure of The list will be expanding, as any private medical facility implementing shift work schedule and modification of can be accepted to the project. job responsibilities without employees’ consent. RIA Novosti The obligation to notify employees of migration to electronic labour records has remained in the draft.

Court Practice

Commercial Court of Moscow comments on use of shareholders) were contested by the taxpayer along beneficial income ownership concept for dividends with the corresponding penalties. Other additional paid to Luxembourg shareholders charges, including the WHT on dividends paid in 2015 to Cypriot shareholders, were not challenged by the A tax inspectorate denied the application of a five- taxpayer. percent withholding tax (“WHT”) rate to dividends paid to Luxembourg shareholders, citing that the beneficial The court supported the tax authorities, stating that to owners of such dividends were holding companies obtain the benefits, the taxpayer had created a chain of registered in the BVI and the ultimate beneficiary of the companies holding the taxpayer’s shares, so that the group. first-level shell companies in the shareholding structure had been registered in the countries having a tax treaty Therefore, the taxpayer was not entitled to the benefits with Russia. granted by the DTTs with Cyprus and Luxembourg. Additional taxes charged following the tax audit exceeded RUB 1 billion, of which nearly RUB 800 million (on dividends for 2016 paid out to Luxembourg 7 The key arguments of the tax authorities that were forward (NDF) contracts with foreign companies, being supported by the court are the following: Cypriot tax residents. • according to the information disclosed by the The underlying assets in those NDFs were gold and the taxpayer, its ultimate beneficiaries are the BVI- USD/RUB exchange rate. registered companies The Russian organisation entered into the NDFs to • the transfer of shares from Cypriot to Luxembourg hedge its currency and gold price risks and later shareholders (in 2015 and 2016, respectively) did recognised them at a loss. According to the terms of the not have a business purpose and was aimed to NDFs, they are regulated and enforced under the laws create a structure of beneficial owners. Since most of of the UK (The Financial Services Act, 1986). the shares were bought with borrowed funds, and During a tax audit, the tax authority pointed out that the created receivables were subsequently the NDFs do not meet the requirements of Articles 301 distributed in kind as dividends to the BVI holding and 326 of the Russian Tax Code in terms of supporting companies, the main purpose of the transaction was documents and economic substance and, therefore, the to artificially create interest expenses for losses they generated cannot be used to reduce the Luxembourg shareholders profit tax base. The tax authority assessed additional • Cypriot and Luxembourg companies lacked profit tax. substance: some of the individuals holding shares of Article 301 of the Russian Tax Code states that a Cypriot companies acted as nominal holders and contract is not recognised as a derivative financial trustees for companies registered in the BVI instrument, if the liabilities it represents cannot be • all Luxembourg companies were registered on the protected at court under the civil law of the Russian same date shortly before dividend distribution, had Federation and/or applicable legislation of foreign no business operations, and issued powers of jurisdictions. attorney to the same persons who were the One of the noteworthy arguments the tax authority taxpayer’s employees cited was that, whereas the UK law was chosen as the • bank accounts of Cypriot, Luxembourg, and BVI applicable law, and under the UK law any investment companies are opened with one bank, the former contract enjoys judicial protection, such contracts are place of employment of Luxembourg shareholders’ only valid and enforceable provided that: the contract[‘s directors; Russian bank accounts of Cypriot and subject matter] should fall under the definition of Luxembourg shareholders were opened with one ‘investment activities’ or should not be listed as an bank, the account opening paperwork referencing exception in Financial Services Act, 1986. This law the taxpayer’s e-mail provides for mandatory licensing of investment business. As the taxpayer did not provide its foreign • Cypriot and Luxembourg companies were counterparties with a permit (licence) to conduct interrelated (had common managers) and controlled investment business, issued under the Financial by the same entity, e.g. received their service fees Services Law, 1986 by the Secretary of State based on via a BVI company the investment business certificate, the court supported • according to bank statements, some of the dividends the tax authority and ruled that the above-described received by Luxembourg shareholders were contracts are not subject to judicial protection under the transferred to the BVI companies (under the guise of UK law and, therefore, do not meet the requirements of interest payments on the loan obtained to purchase Article 301 of the Russian Tax Code. the taxpayer’s shares from Cypriot shareholders), This is the first time a tax authority has considered some were invested in newly created Cyprus applicability of foreign law to derivatives. subsidiaries, and some were used to purchase works of art (through another company in the BVI) To minimise the risks of disputes with the tax authorities, therefore, we advise that the taxpayers • investment activities of Luxembourg shareholders scrutinise the requirements their contracts should meet (via the newly created Cypriot subsidiaries) were to qualify for judicial protection, including the permits artificial, aimed towards obtaining the tax benefits. (licences) held by foreign counterparties that can be These considerations prompted the court to required under the laws of foreign jurisdictions. acknowledge the contested resolution of the tax Digital justice: a database of arbitration cases authority legitimate and justified. Electronic Justice: commercial courts files

Sixth Arbitration Court of Appeal: recognition of losses from transactions in derivatives for tax accounting purposes In 2014‒2015, an organisation, which is a Russian tax resident and taxpayer, signed 57 non-deliverable

8 International law

Eurasian Economic Commission approves plan of • joint development of guidelines action to combat COVID-19 spread in EAEU • joint research and training of specialists to develop A comprehensive action plan to prevent the spread of coordinated response measures to outbreaks of COVID-19 and other infectious diseases provides for: known and new infectious diseases in accordance with the international public health rules. • mutual exchange of information between public health surveillance authorities of the member states Official Eurasian Economic Committee website

9 Deloitte publications

Look-through approach and more... Immigration amnesty for foreigners in Russia extended: key points A bill that is expected to introduce substantial changes in the tax On 15 June, President Putin signed decree No. 392, amending the previously issued Decree No. 274 ‘On regulation was published at the federal draft legislation temporary measures to regulate the legal status of portal. foreign citizens and stateless persons in the Russian The most important of the proposed changes are the Federation due to the threat of further spread of the following: novel coronavirus infection (COVID-19)’. The amendments, just like the original provisions, are • when using the look-through approach, only the designed to liberalise the immigration treatment of international holding companies that are residents of foreign citizens and stateless persons. special administrative districts will remain eligible for withholding tax (“WHT”) benefits (the “substantial Read on to learn more in our LT in Focus of 17 June shareholding exemption”) 2020 • income from the sale of listed shares held by a company for over five years will not be eligible for Dividends and customs value: to include or not to the exemption include. Court practice development. • individuals will be entitled to record in their income Control over the accuracy of declared customs value the dividends they receive from Russian entities has always been a priority for the customs authorities, through a chain of foreign intermediaries and offset with the focus shifting from one aspect to another now the tax withheld from such payments in Russia. it seems to be the turn of dividends. Read on to learn more in our LT in Focus of 25 May Read on to learn more in our LT in Focus of 9 June 2020 2020 and of 19 June 2020

***** We hope that you will find this edition interesting and informative. Should you have any questions on this subject, please do not hesitate to contact us. Best regards, Deloitte CIS Partners 10 Contacts

Tax & Legal

Svetlana Meyer Gennady Kamyshnikov Managing Partner Partner Tax&Legal, Deloitte CIS Private & Corporate Tax [email protected] [email protected]

Oleg Berezin Oxana Zhupina Partner Partner, Pharmaceuticals Consumer Products [email protected] [email protected]

Yulia Orlova Vladimir Elizarov Partner Partner Metals and Processing Technology, Media, Entertainment & [email protected] Telecommunications [email protected]

Artem Vasyutin Yulia Krylova Partner Director Retail, Wholesale and Distribution Real Estate Tourism and Hospitality [email protected] [email protected]

Tatiana Kofanova Yuliya Menshikova Partner Director Automotive Oil & Gas, Energy & Resources, Mining [email protected] [email protected]

Anna Kostyra Anton Zykov Managing Partner Partner Deloitte Legal Tax Dispute Resolution [email protected] [email protected]

Yuliya Bolshakova Dmitry Pozharniy Senior Consultant Director Art & Finance Aviation & Transportation [email protected] [email protected]

11 TaxSmart app

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