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Tax & Legal
7-13 June 2021
Legislative Tracking
Be in the know
Legislative initiatives Regulatory Clarifications
President of Russia signs bills into federal laws Ministry of Finance provides more details on interpretation of terms used in amended tax treaty
with Cyprus
Russia notifies Netherlands of tax treaty denunciation
Bill cancelling FX revenue repatriation requirements for non-resource exporters passes first reading
Media Review
Bill easing restrictions for foreign shareholders of Russian media passes third reading
Ministry of Finance to select restaurants for its VAT exemption pilot
Court Practice
Interest debt offset against capital contribution treated as debt forgiveness
International tax news
Parliament gives its final green light to EU Digital COVID Certificate
Cyprus – Netherlands tax treaty signed
G7 strikes deal on minimum corporate tax rate for multinationals
Cyprus once again postpones DAC6 reporting deadlines
© 2021 Deloitte Consulting LLC. All rights reserved. 1
Legislative initiatives Also, revenue repatriation requirements will be waived for loans to non-residents and FX-
denominated export contracts under which a FX prepayment has been made to a non-resident.
President of Russia signs bills into federal laws
The bill permits depositing FX denominated export revenues to foreign bank accounts.
In particular, the following federal laws were signed:.
At the same time, where a contract between a resident and non-resident provides for transfer of
• Federal Law No. 200-FZ of 11 June 2021, introducing administrative sanctions for non- goods/information/IP assets or provision of services, residents will be required to report receipt of
reporting money transfers via foreign electronic means of payment contract payments or other discharge of such contract as permitted by the Russian legislation, as
• Federal Law No. 174-FZ of 11 June 2021, obliging corporate groups to report their investment well as the assets and liabilities that are denominated and/or payable to non-residents in a foreign
activities currency.
Official Internet Portal for Legal Information Such reporting will be overseen by the Bank of Russia (subject to approval by the Ministries of
Finance and Economic Development), the list of residents required to file mandatory reports to be
disclosed on its official Internet site.
Russia notifies Netherlands of tax treaty denunciation If adopted, the law will enter into force on 1 July 2021.
With Note No 6251/1edn dated 7 June 2021, Russia’s Foreign Affairs Ministry officially notified the Official Internet site of the Russian State Duma
Netherlands of the denunciation of the tax treaty between Russia and the Netherlands. The treaty
will terminate in 1 January 2022.
Official Internet site of the Ministry of Finance of Russia Bill easing restrictions for foreign shareholders of Russian media passes third reading
The bill eliminates the ban to exercise corporate rights within the limits not exceeding 20 percent
of foreign shareholding in a media outlet and rights to judicial relief.
Bill cancelling FX revenue repatriation requirements for non-resource exporters passes first reading
The bill applies to foreign states, legal entities, and individuals, to international organisations,
According to the current legislation, exporters must repatriate their revenues in foreign currency Russian legal entities with a foreign participation of over 20 percent, stateless persons, as well as
to accounts with authorised Russian banks. Russians holding foreign citizenship.
At the same time, if a Russian resident for currency control purposes signs an export contract According to the explanatory note, voting rights held by the above-mentioned persons must be
denominated in roubles: taken into account when determining the quorum of a general meeting of shareholders and when
• for non-resource exports, the revenue repatriation requirement is waived counting votes within the limits not exceeding the 20-percent shareholding.
• for resource exports (depending on commodity type), the share of rouble-denominated To compare, the existing rules deprive these persons of all corporate rights.
revenue exempt from repatriation has been increased to 30 percent starting from 1 January Official Internet Portal for Legal Information
2021.
The new bill proposes waiving this requirement for non-resource FX-denominated export
contracts starting from 1 July 2021 (except certain commodity types).
© 2020 Deloitte Consulting LLC. All rights reserved. 2
Regulatory Clarifications Court Practice
Ministry of Finance provides more details on interpretation of terms used in amended tax treaty Interest debt offset against capital contribution treated as debt forgiveness
with Cyprus A company borrowed funds under a subordinated loan agreement. Interest expenses were
The revised tax treaty with Cyprus enables claiming a five-percent WHT rate on dividends deducted for CIT purposes under the thin capitalisation rules. The total Interest expenses
payable to a Cypriot resident being the beneficial income owner of such income, meeting all of deducted over the entire term of the loan agreement exceeded RUB 1.1 billion.
the criteria below: A portion of the interest was capitalised under the agreement terms.
• is a company listed on a registered stock exchange The loan was further assigned to the company’s foreign shareholder and then terminated by
• has at least 15 percent of voting shares in free float way of an offset against its contribution to the authorised capital.
• has directly held at least 15 percent of the dividend payor’s equity for 365 days, including the More specifically, the following sequence of transactions took place:
dividend distribution date. • the debt was ceded to the shareholder, the company undertaking to assume a monetary
The ministry repeatedly clarified how the terms “shares” and “registered stock exchange” must obligation towards the shareholder
be construed, reaffirming its earlier position and explaining how the free float must be • on the same day, a decision was made to increase the company’s authorised capital
calculated:
• the consideration for debt assignment was offset against the capital contribution
• the free float is determined by subtracting the number of shares not in free float from the
total number of the issuer's shares of one category (type) • the authorised capital was increased by RUB 10,000, the remaining amount (nearly EUR 410
million) was used to increase the additional capital.
• the rules for calculating the free float are determined depending on the category of the
shareholder and are not tied to any stock exchange. The company did not recognise any income from the above-mentioned transactions, but
claimed the exemption granted by the Russian Tax Code for capital and property contributions.
The ministry believes that to calculate the percentage of voting shares in free float, all shares of
the same type must be taken into account – without singling out the shares traded on Russian That is, a situation has arisen when the company charged almost RUB 1.1 billion to interest
or Cypriot stock exchanges. expenses in past periods and then "paid" this interest by offsetting it against the shareholder’s
obligation to make a capital contribution.
Consultant Plus
The tax inspectorate treated the overdue interest expenses previously deducted for CIT
Media Review purposes as debt forgiveness, citing that the company had not effectively incurred these
expenses.
Ministry of Finance to select restaurants for its VAT exemption pilot
The approach was supported by the first-instance court.
The ministry is planning to select 500 restaurants generating up to RUB 2 billion in annual
revenue in an effort to discourage under-the-table salaries, Minister of Finance Anton Siluanov In the company's opinion, assignment of debt followed by its offset against a capital
said at the St. Petersburg Economic Forum. contribution was not primarily aimed at forgiving the debt.
The pilot may start this autumn and run for at least a year. This is evidenced by the fact that after the stabilisation of the economic situation (in 2019-
2020), the company reduced its additional capital and used the distributions to pay off its
Tass News Agency obligations under a syndicated loan.
However, the court disregarded the argument.
© 2020 Deloitte Consulting LLC. All rights reserved. 3
Electronic Justice: commercial courts files
International tax news In all instances, the Treaty benefits are conditioned on beneficial income ownership.
Parliament gives its final green light to EU Digital COVID Certificate For more details, please refer to Cyprus Tax News of 9 June 2021.
The European Parliament at a plenary meeting approved the introduction of COVID certificates.
The has been soft-launched already and will officially apply as of 1 July 2021, remaining in place G7 strikes deal on minimum corporate tax rate for multinationals
for 12 months.
The G7 finance ministers and central bank governors released a communiqué, establishing
The document will certify that a person has been vaccinated against COVID-19, has a recent landmark agreements on reforming the global tax system, namely:
negative test result, or has recovered from the infection.
• to set a global minimum corporate tax rate of 15 percent
The certificate will be issued free of charge by national authorities and be available in English
• to reach an equitable solution on the allocation of taxing rights, with market countries
and in a national language, in either digital or paper format, containing a QR code to verify its
awarded taxing rights on at least 20 percent of profit exceeding a 10-percent margin
genuineness.
• to provide for appropriate coordination between the application of the new international tax
The EU states will not be able to impose additional travel restrictions on certificate holders, such
rules and the removal of all digital services taxes, and similar relevant measures.
as quarantine, self-isolation, or testing.
The communiqué expresses strong support for the ongoing work carried out by the OECD as
Official OECD website
part of its BEPS 2.0 Pillar One and Two projects.
Cyprus – Netherlands tax treaty signed The agreement will be discussed in detail at a meeting of the G20 finance ministers in July.
On 1 June 2021, Cyprus signed a tax treaty for the avoidance of double taxation Vedomosti
(“the Treaty”) with the Netherlands
The Treaty is based on the OECD Model Tax Convention and will enter into force once all
domestic procedures are complete. Cyprus once again postpones DAC6 reporting deadlines
The Cypriot Tax Department released a communique, informing that no administrative fines
The Treaty establishes the following WHT rates:
would be charged for overdue submission of DAC6 information, provided it is submitted before
• for dividends: no WHT, if the beneficial owner (BO) is: 30 September 2021 (vs. 30 June 2021 according to the earlier announcements).
o a company that holds directly at least 5 percent of the capital of the In this regard, the sample XML file posted on the website of the Tax Department was updated:
company paying the dividends throughout a 365-day period that fields for the associated enterprises of the taxpayer were added.
includes the day of payment
Official website of the Cypriot Tax Department
o 15 percent for all other cases (with a few exceptions for pension funds)
• for interest: no WHT
• for royalties: no WHT
© 2020 Deloitte Consulting LLC. All rights reserved. 4
Deloitte publications
Immigration amnesty for foreigners in Russia extended: fourth round Foreign IT companies may be obliged to open local offices in Russia
On 15 June, President Putin signed Decree No. 364, amending the rules of stay/residence for the A billintroducing new obligations for foreign IT companies with a daily Russian audience of
foreign citizens and stateless persons stranded in Russia due to the COVID-19 restrictions. The 500,000+ users has been laid before the Russian State Duma.
decree will (for the fourth time in a row) extend the so-called “immigration amnesty”, the third
Such companies will be obliged to:
round of which expired on the same date.
• open an personal account on the website of Roskomnadzor(the federal mass media
Read on for more details in our LT in Focus of 16 June 2021
watchdog)
• open a branch, a representative office, or a subsidiary in Russia
Russia notifies the Netherlands of withdrawal from the tax treaty
• create an online feedback form for Russian users.
With Note No. 6251 / 1edna of 7 June 2021, The Russian Ministry of Foreign Affairs officially
The same requirements will apply to hosting providers, advertising system operators, and the so-
notified the Netherlands of the denunciation of the tax treaty between Russia and the
called ‘online information distributors’.
Netherlands.
Sanctions for non-compliance will includeinter alia a ban to transfer money and accept payments
The tax treaty will be terminated on 1 January 2022.
from Russian users.
Read on for more details in our LT in Focus of 10 June 2021
According to the explanatory note, the bill is aimed to ensure the equal treatment of Russian and
foreign IT companies and establish a legal framework for IT companies delivering services to
Russian users.
Read on for more details in our LT in Focus of 26 May 2021
© 2020 Deloitte Consulting LLC. All rights reserved. 5
Contacts
Tax & Legal
Pavel Balashov Irina Androncheva Tamara Arkhangelskaya Emil Baburov Dmitriy Bespalov Oleg Berezin
Managing Partner Director Partner Director Digital Director Partner
Tax & Legal iandroncheva@deloitte.ru tarkhangelskaya@deloitte.ru ebaburov@deloitte.ru dbespalov@deloitte.ru oberezin@deloitte.ru
pbalashov@deloitte.ru
Svetlana Borisova Veronika Varshavskaya Artem Vasyutin Vladimir Elizarov Oksana Zhupina Anton Zykov
Partner Director Partner Partner Partner Partner
sborisova@deloitte.ru vvarshavskaya@deloitte.ru avasyutin@deloitte.ru velizarov@deloitte.ru ozhupina@deloitte.ru azykov@deloitte.ru
Gennady Kamyshnikov Tatiana Kiseliova Anna Klimova Elena Kovalevich Nikita Korobeynikov Tatiana Kofanova
Partner Partner Director Partner Director Partner
gkamyshnikov@deloitte.ru tkiseliova@deloitte.ru aklimova@deloitte.ru ekovalevich@deloitte.ru Russia Legal Leader tkofanova@deloitte.ru
nkorobeinikov@deloitte.ru
© 2020 Deloitte Consulting LLC. All rights reserved. 6
Contacts Tax & Legal Yulia Krylova Natalia Kuznetsova Dmitry Kulakov Anastasia Matveeva Yuliya Menshikova Maxim Moseykov Director Partner Partner Director Director Director ykrylova@deloitte.ru nkuznetsova@deloitte.ru dkulakov@deloitte.ru amatveeva@deloitte.ru ymenshikova@deloitte.ru mmoseykov@deloitte.ru Yulia Orlova Andrey Panin Leonid Pechernikov Maria Podosenova Dmitry Pozharniy Ekaterina Portman Partner Partner Director Director Director Director yorlova@deloitte.ru apanin@deloitte.ru lpechernikov@deloitte.ru mpodosenova@deloitte.ru dpozharniy@deloitte.ru eportman@deloitte.ru Alexey Sobchuk Elena Solovyova Oleg Troshin Elena Sivenkova Yuriy Khalimovskiy Director Partner Director Director Director asobchuk@deloitte.ru esolovyova@deloitte.ru otroshin@deloitte.ru esivenkova@deloitte.ru yukhalimovskiy@deloitte.ru © 2020 Deloitte Consulting LLC. All rights reserved. 7
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