17 December 2014
Ararat Park Hyatt

AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

Anastasia Spiridonova
Deloitte

What is Tax Monitoring?
It is a new way of working with the Tax Authorities. The principle is to achieve a collaborative relationship between the tax authorities and businesses based on trust, understanding and transparency. The aim is to give the business certainty of the tax position as quickly as possible.
Who can participate?
 Accrued taxes RUB
300
mln.
 Revenue RUB
3
bln.
 Assets RUB
3
bln.
When?
 starting from
01
January 2016 if the application submitted till
01
July 2015
How?
 on a voluntary basis
 by singing the agreement for information collaboration
 on all taxes and duties
 with electronic communication or online access to ERP
 open minded dialog in the form of questions and answers
(determined opinion/мотивированное мнение)
 without field visit
Period covered
 one calendar year

Practical implication
Determined opinion (мотивированное мнение)
 at request of the taxpayer or by the tax authorities’ decision
 period of consideration of the taxpayer’s request is 1 month
 transfer pricing matters cannot be a subject of determined opinion
 resolve of conflicts in Federal Tax Service
Benefits and limitations
 no late payment interest if the taxpayer fulfilled the determined opinion
 no desk tax audits for the period of tax monitoring. Exceptions:
(1) decreasing tax obligations
(2) early termination of tax monitoring
(3) late submission of tax return
(4) claiming VAT or excise from the budget
 no field tax audits for the period of tax monitoring. Exceptions:
(1) and (2) as above
(3) initiated by the higher tax authorities
(4) non-following of the determined opinion

Making a rational decision…
 Is company’s tax function ready for tax monitoring?
 Are there adequate resources to support the workload?
 Can the amount of possible exposure be predicted?
 Does the overall tax risk appetite hinder the use of tax monitoring?
 Ability to commit to high level of transparency?
The tax authorities have publicly announced that they will approach Tax Monitoring in a positive manner.

AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

Denis Zaytsev
DS Law

New in legislation
Federal law № 143-FZ dated 04 June 2014:
Change of subject-matter jurisdiction. All disputes regarding challenge of cadaster value of assets and land plots have been passed to the courts of general jurisdiction.
Federal law № 225-FZ dated 22 July 2014:
- right to amend draft of project of evaluation of cadaster value;
- obligatory pre-trial disputing of cadaster value for legal entities;
- new concrete terms of evaluation of cadaster value;
- new terms to dispute results of conducted evaluation of cadaster value;
- new order to approve change of cadaster value under decision of commission or court.

New in court practice
Ruling of Presidium of Highest Commercial Court of the RF dd.
11.02.2014 case № 13839/13
Decision of Commercial court of Krasnoyarskiy krai dd. 09.12.2014 case
№ А33-11253/2012
Ruling of Tenth commercial appeal court dd. 12.11.2014 case № А41-
35176/14
Order of Supreme Court of the RF dd. 12.11.2014 case № 5-АПГ14-52
Ruling of Commercial court of North-Caucasian district dd. 04.12.2014
case № А53-3588/2014

New in disputing cadaster value of assets and land plots

AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

Mikhail Orlov
Partner, KPMG
Head of Tax&Legal, Russia&CIS

Federal Law No. 382-FZ dated 29 November
2014 (enters into force from 1 January 2015)

Russia will be deemed the place of supply for air transportation services provided by Russian airlines if the goods are transported between two points outside Russia and the aircraft lands in Russia. Such services will be subject to the zero percent VAT rate (clause 1 of Article 148 and clause 1 of Article
164 of the RF Tax Code)

Taxpayers will have the right to offset input VAT in any period within three years of the booking of the goods (work, services) and property rights in the accounting (clause 1.1 of Article 172 of the RF Tax Code)

Federal Law No. 382-FZ dated 29 November
2014 (enters into force from 1 January 2015)

Taxpayers will have the right to offset input VAT in the period when the goods (work, services) were purchased even if the VAT invoice is received in the next period, but before the filing date of the VAT tax return for the previous tax period

The deadline for filing the VAT tax return and VAT payment is extended for five days

Federal Law No. 366-FZ dated 24 November 2014 (enters into force from 1 January 2015)


There will be no need to restore input VAT related to goods, work, services used in activities subject to the zero percent VAT rate (sub-clause 5, clause 3 of Article 170 of the RF Tax Code)
It will be possible to fully offset input VAT related to expenses, whose deductibility has been limited for corporate income tax purposes (clause 7 of
Article 171 of the RF Tax Code)

Order No. ММВ-7-3/558@ of the Russian Federal Tax
Service dated 29 October 2014
The new form of the VAT return, which will include information from the sales and purchases ledgers, is currently awaiting registration at the Russian
Ministry of Justice

AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

(bonuses, inventory losses, advertising, international transportation)
Vladimir Konstantinov
PwC

Agenda
• Bonuses
• Resolution #33 of Plenum of Supreme Arbitration Court
2

Bonuses
The nature of bonuses:
? Reduction of sales price
? Payments for sales promotion services
? VAT neutral incentive payments
3

Bonuses
Leroy Merlin case - Decision of the Presidium of the Supreme
Arbitration Court of the Russian Federation #11637/11 of 7 February
2012
• Bonuses are trade discounts
• Input VAT recovery reversal
• Significant risk for significant amount
4

Bonuses
*Impact of Leroy Merlin case
• Tax audits
• Court practice
5

Bonuses
Court practice positive negative
12/02/12
2012 2013 2014
6

Bonuses
*Pattern of decisions? (1 of 2)
• Bonuses do not change price under the contract
• No corrective VAT invoices
11/06/2014
Sodexo EuroAsia LLC
Cassation level (Moscow Region)
#A40-976590/13
Period: 2010 – 2011
Judges:
• KOROTYGINA N.V.
• BUYANOVA N.V.
• SHISHOVA O.A.
21/06/2014
Castorama RUS LLC
Cassation level (Moscow Region
#A40-39492/13
Period: 2009 - 2010
Judges:
• BUYANOVA N.V.
• EGOROVA T.A.
• SHISHOVA O.A.
7

Bonuses
*Pattern of decisions? (2 of 2)
• Bonuses do not change price under the contract
• No corrective VAT invoices
10/10/2014
Pharmperspectiva LLC
Supreme court
#306-КГ14-1504
Period: 2009 – 2010
Judge - PERSHUTOV A.G.
VAT recovery should not be reversed
10/11/2014
Castorama RUS LLC
Supreme court
#305-КГ14-3243
Period: 2009 - 2010
Judge - PERSHUTOV A.G.
VAT recovery should be reversed
8

Bonuses
*Conclusions
• Risk of loss has increased
• Tax environment
• Risk management – various scenarios are possible
9

Overview of the Resolution of SAC Plenum
• Resolution on VAT matters (no. 33 dated 30 May
2014);
• Significance of the Resolution.
10

Inventory losses
Inventory losses – output VAT due?
• Reasons – outside control of tax payers
• Documents
• Volume of losses – “common level”
11

Advertising materials
Range of free distribution which does not trigger VAT costs is changed (reduced)
• Items which may not be regarded as “goods”
12

Thank you for attention
Vladimir Konstantinov
PwC
Partner, Indirect Tax Leader vladimir.konstantinov@ru.pwc.com
Tel.: + 7 (495) 967 6236

AEB Taxation Committee Business Meeting: ”Is the Russian Tax Reform at an end?”, 17 December 2014, MOSCOW

TAX CRIMES INVESTIGATIONS - NEW
DANGERS FOR BUSINESS AND DEFENCE
TACTICS
Alexander Erasov
Senior Associate / Tax Dispute Resolution / Tax Crime Defence
Goltsblat BLP
Goltsblat BLP LLP is the Russian practice of Berwin Leighton Paisner (BLP), an award-winning international law firm with offices in London,
Moscow, Abu Dhabi, Beijing, Berlin, Brussels, Dubai, Frankfurt, Hong Kong, Paris and Singapore
AEB Business Meeting: "IS THE RUSSIAN TAX REFORM AT AN END?”, December 17, 2014, Moscow

What has changed?
PLUS
– The list of actions falling within the scope of property and money laundering (legalisation) is expanded
– The Deoffshorisation Law is adopted
– Amendments to Art. 199 of the Criminal Code (tax evasion by an organisation) are expected
– The draft law “on tax right abuse” is on the agenda
What might it lead to?

Relief from criminal liability for tax crimes
 Termination of statute of limitations
 Active repentance
 Special grounds and conditions for relief from criminal liability for tax crimes o Tax evasion and failure to withhold tax (Articles 198-199 1 of the Russian Criminal code)
• Tax arrears + fines and late payment interest are paid in full
• Payment is made before a court session is appointed o Concealment of monetary resources or property for recovering tax arrears (Article 199 2 of the Russian Criminal code)
• Six-fold recovery of damages

Here come the police – defence tactics
 Search and detection agents
 Investigative Committee of the
Russian Federation
 Agree your actions with your lawyer/advocate
– Do not be in a hurry to submit
additional evidence - the less you provide to law enforcement officers, the higher your chances of later improving the situation
 The information stated in your documents should be in line with data from other sources – do not disprove yourself, leave this to the officers

Here come the police – defence tactics
 CALL YOUR ADVOCATE
 Do not get in the way of law enforcement officers ( though you are not obliged to help )
 Monitor all actions taken by law enforcement officers
 Do not destroy or delete any documents, correspondence or phone messages
 Do not provide false information
 Avoid provoking the officers
 Neither discuss nor give any explanations on the merits
 Do not give in to psychological pressure exerted by law enforcement officers

Thank you for your time & attention
Alexander Erasov
Senior Associate
Tax Dispute Resolution / Tax Crime Defence
Goltsblat BLP
+7 (919) 778 67 77
Alexander.Erasov@gblplaw.com
AEB Business Meeting: "IS THE RUSSIAN TAX REFORM AT AN END?”, December 17, 2014, Moscow

AEB Open Event: Round Table ”Internal Communications: Best Practices”, 19 JUNE 2014, MOSCOW