In accordance with the Federal Law № 100-FZ of 20.04.2021 additional responsibilities for foreign companies, as well as foreign entities without incorporation, registered with the Russian tax authorities were added. This includes directly foreign companies, which have received Russian TIN for a bank account in Russian Federation, branches and representatives (hereinafter, – foreign organizations).

In particular, the law obliges foreign organizations, as well as foreign entities without incorporation to report the following information to the tax authorities at the place of their registration:

• Information about the participants of the foreign organization;
• Information on founders, beneficiaries and managers (for a foreign entity without incorporation);
• Information on participation (if any) of a natural person or company, if the share of their direct and (or) indirect participation in the foreign company exceeds 5%.

The above-mentioned information should be submitted to the tax authority annually not later than March 28, considering that the information should be formed in the tax authorities as of December 31 of the year preceding the year of its submission. Thus, the next report with information as of 2021 should be submitted not later than March 28, 2022. The form of this report will be approved additionally.

Previously p. 3.2 of Art. 23 of the Tax Code provided for the above obligation only for foreign organizations that had their own taxable immovable property in Russian Federation.

Failure to provide this information in accordance with p. 6. of Art. 1 of the Federal Law № 100-FZ of 20.04.2021 shall entail a penalty of 50 000 ruble. Please note that this obligation does not apply to foreign companies which are registered with the Russian tax authorities only due to the provision of services in electronic form, as well as subsidiaries (OOO) with foreign ownership. 

We would like to introduce you to the new standard FAS 27/2021 “Documents and document flow in accounting”, approved by Order No. 62n (registered with the Ministry of Justice on 07.06.2021).

The standard introduces new concepts and legislative norms that significantly change the order of document flow and storage of companies’ documents (except for organizations in the public sector).

The new standard regulates such things as the procedure for signing documents, the date of documents, the language of documents, making corrections and other aspects mandatory for local accounting services in Russia after the introduction of the standard. For your convenience, we have prepared a consolidated overview of the main changes introduced by the new FAS (the overview is available in Russian at the link).

Special attention of foreign companies operating in Russia deserves paragraph 25 of the standard:

Storage of accounting documents
An economic entity must keep accounting documents as well as data contained in such documents and locate the databases of such data in the territory of the Russian Federation.

If the laws or regulations of the country – the place of business outside the Russian Federation – require storage of accounting documents in the territory of this country, such storage should be ensured.

The paragraph about the need to keep accounting registers in the Russian Federation raises the most questions from foreign companies.

Many international companies (especially those using SAP, Navision and other international accounting systems) often use servers outside the Russian Federation, which are shared by the group of companies, so the requirement to store registers within the country may entail significant structural changes.

At the moment, however, there is no direct indication in the standard (paragraph 25) as to whether the primary accounting registers should be stored in Russia or whether it will be sufficient to ensure the storage of a copy of the registers to meet the requirements of the new FAS.

In this connection, collective appeals by international business associations to the Ministry of Finance requesting the necessary clarifications are currently being prepared. We are closely monitoring the situation and will be happy to offer updates on this topic should further information become available.

We will be glad to answer your questions!

In case your activity involves processing of personal data by using a website, we recommend that you check compliance with all legal requirements for the protection of personal data.

Starting March 27, 2021 the liability for violation of the processing of personal data became more strict: provisions of the Federal Law dated February 24, 2021 Nr. 19- FZ “On Amending the Russian Federation Code of Administrative Offences” will come into force.

This law increases the following fines:

• Legal entities may face a fine from sixty thousand to one hundred thousand rubles for unlawful and/or non-purpose data processing.
• In the absence of legally required consent to the processing of personal data, legal entities face a fine of thirty thousand to one hundred and fifty thousand rubles.
• Failure to provide users/subjects of personal data with access to the personal data processing policy or information on the personal data protection requirements being met may subject legal entities to a fine of thirty to sixty thousand rubles.

In addition to the fines increase, the warning as a form of administrative responsibility for violation of legislation on personal data is eliminated. According to clause 2 of the mentioned law, the limitation period for that kind of violation is increased to 1 year. Please note that Federal Supervision Service for Communications, Information Technologies and Media (Roskomnadzor) may inspect the compliance of the data collection and processing with Russian law. The first check may take place after three years from the date of registration of a legal entity by the tax authority. The second check will also be possible after the expiration of the three-year period from the date of the last scheduled check of the operator.

We recommend that you check your company for inclusion in the inspection plan on the official website of Roskomnadzor and prepare the necessary documents in case of an inspection. Unscheduled inspection of the company can be initiated if violations on the website are detected or if previously detected violations have not been eliminated. We will be happy to answer your questions!

Contacts:
Maria Matrossowa, Project leader swilar OOO
M: maria.matrossowa@swilar.ru, T: + 7 499 978 37 87 (ext. 308)
Tatiana Ushakova, Project manager swilar OOO
M: tatiana.ushakova@swilar.ru, T: +7 499 978 37 87 (ext. 309)

The latest news regarding the revision of double taxation avoidance agreements (DTAAs)

The DTAA protocol with Luxembourg was ratified in February, thus the protocol entered into force on 5 March 2021 and its provisions will apply from 1 January 2022 (the changes were previously expected to be adopted from 1 January 2021).

The protocol increases the withholding tax rate on dividend and interest income to 15%, with some exceptions for institutional investments.

In 2020, protocols to make similar changes to the DTAA were also signed with Cyprus and Malta, with effect from 1 January 2021.

On 26 May 2021, the law No. 1147902-7 on the denunciation of the double taxation avoidance agreement with the Netherlands was approved and published. The adoption of the law leads to the fact that parent companies registered in the Netherlands will pay tax on dividends at a rate of 15% instead of 3-5%, and the rate for interest and royalties will be 20%.

On June 7, 2021 Russia notified the Netherlands about denunciation of the agreement, the changes will come into force on January 1, 2022.

Switzerland is the next major jurisdiction in the negotiation process initiated by Russian Ministry of Finance. There are 2 more key jurisdictions remaining for revising the DTAAs, said Deputy Finance Minister Alexei Sazanov, namely, Hong Kong and Singapore.

There have been no official announcements of changes to other DTAAs yet.