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1. Updating a company’s details in the EGRUL
Tax authorities are now checking more frequently whether a company’s details in the Unified State Register of Legal Entities(referred to in Russian using the abbreviation EGRUL) are accurate.
Tax inspectors check the information entered in the EGRUL with respect to the following:
- The legal address (including office number) via which the company can be contacted;
- The company’s founders;
- The passport details and Taxpayer’s Identification Number of the company’s CEO.
If any inaccurate information is identified, the tax inspectorate will make a note that the information in the EGRUL is not accurate.
A legal entity that receives such a note may face serious repercussions, such as:
- the company’s bank account may be blocked and the company may be unable to open a new bank account with another bank;
- the company may experience difficulties in entering into contracts with counterparties that check its good faith before concluding a contract.
- it will not be possible to register a new legal entity for three years after an entry is made in the EGRUL that the previous company’s details were inaccurate.
- the legal entity may be compulsorily wound up (from 1 September 2017 the list of organizations` exclusion cases from EGRUL by registrant decision will be extended).
- the company may face administrative liability as follows:
- if inaccurate information is submitted on one occasion, an administrative fine ranging from RUB 5,000 to 10,000 may be imposed;
- if this happens on several occasions, the company’s officers may be disqualified for 1 year to 3 years.
It is therefore advisable to check whether your company’s details in the EGRUL are accurate. If there is no office number in the address or the CEO’s passport details are incorrectly stated, the corresponding changes need to be made.
Acsour will be happy to assist you in checking whether your company’s details in the EGRUL are up-to-date and in making any necessary updates to the details.
2. A certificate of residency is not necessary on the date of paying income
The Russian Supreme Court has advised that, when income is paid to a foreign legal entity, it is permitted not to withhold tax even if the document is not available at the date of payment confirming the foreign counterparty’s permanent residency abroad, i.e. a certificate of residency.
In the recent legal overview, which was approved by the Presidium of the Russian Supreme Court, it was concluded that a Russian legal entity does not have to possess a certificate of residency on the date when income is paid in order not to withhold the tax. A tax agent should be given the opportunity to submit the certificate on a later date, e.g. during a tax audit. In this case no default interest should be charged.
Acsour will provide its expert opinion as to whether transactions with foreign legal entities have been taxed as they should have been.
3. An electronic certificate may be used to confirm tax residency
The Russian Finance Ministry has recognized that electronic certificates of residency of a foreign counterparty are lawful.
According to the explanations of the Finance Ministry, the procedures and methods by which certificates of residency are issued (i.e. in hard copy or in electronic form) fall within the exclusive competence of the foreign state in question. Therefore, if the legislation of such foreign state provides that confirmation of a taxpayer’s residency is permitted to be in electronic form, Russian tax agents may treat such electronic documents as a counterparty’s confirmation of its taxpayer status.
For any issues relating to confirmation of the status of a foreign counterparty, please contact your manager at Acsour.
4. Members of international groups of companies will be obliged to submit additional information to tax authorities
A draft law provides that companies should submit information regarding their membership of an international group, as well as country-specific information and other financial data. The law in question is expected to come into effect from1 January 2018, with a transitional period from 2018 to 2020 during which taxpayers will not be fined for violating this legal rule.
The Russian Finance Ministry has drawn up draft amendments to the Russian Tax Code aimed at implementing the Convention on mutual administrative assistance in tax matters. The Convention provides that international agreements will be concluded between competent authorities of contracting states, and that such agreements will determine the procedure for exchanging information for tax purposes.
For this reason, the Russian Tax Code will be supplemented with a new chapter, which will contain definitions, among others, of such concepts as an ‘international group of companies’, a ‘member of an international group of companies’, a ‘parent company of international group of companies’, and ‘country-specific information regarding an international group of companies’.
The companies will be obliged to submit additional information to the tax authorities, such as:
- a notification of their membership in international group;
- a report containing country-specific information;
- global documentation (containing information regarding the shareholder and business structure of the international group of companies);
- national documentation (with respect to controlled transactions to which either party is another member of the international group).
Moreover, the draft law establishes a procedure for the automatic exchange of financial information with foreign states, the relevant obligations of players on the financial market, and the powers of the Russian Federal Tax Service.
Acsour is closely monitoring this draft law and will inform you of anything you need to do, should the draft law be enacted.
5. Criminal liability is being introduced for non-payment of insurance contributions
A taxpayer’s liability for failure to pay insurance contributions has become more stringent since 10 August 2017. Where there are large arrears, CEOs of companies will face criminal liability.
The new statutory rules provide for a management of the organization to be liable for a failure to arrange the payment of insurance contributions. The minimum sanction will be a fine of RUB 100,000, while the harshest is imprisonment for up to 6 years.
A criminal offence will be classified according to the following parameters:
- arrears in insurance contributions, as well as taxes and levies, exceed RUB 5 million in total over 3 financial years;
- at the same time, the outstanding taxes, levies and insurance contributions account for over 25% of those that are payable, or RUB 15 million.
For a criminal offence relating to contributions for injuries, RUB 2 million will be regarded as the threshold for arrears to be regarded as ‘large-scale arrears’.
For a first offence (i.e. in the first case of non-payment), criminal liability may be avoided. To this end, the arrears must be paid in full together with default interest and a fine.
Acsour’s accountants will check whether your company is paying its taxes and levies in a proper and timely manner.
6. Roskomnadzor has issued recommendations on how documents should be drafted regulating the processing of personal data
Roskomnadzor has given recommendations on how a company should draw up its internal regulations that determine its policy, as an operator, on the processing of personal data.
It is recommended that the following structural components be included in the document:
- the purposes for which personal data is processed;
- the legal grounds on which personal data is processed;
- the scope and categories of personal data to be processed, and the categories of personal data subjects;
- the procedure and conditions for processing personal data;
- provisions concerning the updating, correction, deletion and destruction of personal data, and responses to requests from subjects to access their personal data.
Acsour’s legal department will help you to properly draft your internal regulations relating to the processing of personal data.
7. Information regarding counterparties will be available on the Federal Tax Service’s website from 1 June 2018
Last month, Acsour advised that public information regarding legal entities will be published on the Federal Tax Service’s website from 25 July 2017. Regrettably, the federal agency has postponed the deadline for launching this service.
Information regarding counterparties will be updated on an annual basis, starting from 1 June 2018. Such information will be publicly available for at least a year following the year in which such information was posted.
From the publicly available information, it will be possible to find information regarding:
- arrears of and unpaid default interest and fines;
- tax offences and liability for them;
- special tax treatment and membership of a consolidated group of taxpayers;
- average headcount, taxes and levies paid, and a company’s income and expenses according to its financial statements.
Acsour’s experts are ready check the good faith of your counterparties.