New rules for international exchange of tax data

By Ivan Katyshev, Head of Legal Services Group

The Russian government has passed a bill on collection by Russian tax authorities of information necessary for automatic exchange with tax authorities from other countries. This will primarily affect international groups of companies whose revenues exceed RUB 50 billion. Over 90 countries have already joined this tax mechanism.

Ivan Katyshev
Head of Legal Services Group
A number of amendments have been proposed for introduction to the Tax Code. These amendments are intended to set out how Russian and foreign tax authorities should cooperate to conduct tax monitoring and joint tax audits, as well as how information should be collected to fulfill the conditions provided in multilateral agreements for automatic exchange of financial information and automatic exchange by country tax reports.

Companies need to prepare three types of reporting: national (transfer price), country (revenue, loss, profit tax, retained earnings and assets) and global (market of operations, operations and supply generating more than 5% of revenues, conditions of internal contracts, financing system, company strategies, restructuring transaction details).

The government considers that the adoption of the bill will allow Russia to fulfill its obligations of international automatic exchange of on financial accounts and documentation for international groups of companies. The purpose of this tax mechanism is to combat tax evasion.

Our opinion:

The government has been discussing this bill since 2015, and it is now being put forward to the State Duma for approval. This bill reflects the global trend towards a certain unification of standards of transfer pricing documentation for international groups of companies proposed by BEPS and intended to generate a global increase in control over groups of companies.

Now, large international companies need to prepare and submit documentation for controlled transactions more carefully. They also need to revise their standards and get the submitted information approved by all the companies of the group. Tax authorities from other countries may obtain everything which is submitted in a country report to verify the information submitted by a group entity in another country.

The draft submitted to the State Duma includes the remarks previously made by the Ministry of Economic Development. This new draft changes the deadlines for submission of global documentation, the submission form (now only on paper), and the entry into force of the law, i.e. 2018. A fine of RUB 100,000 has also been introduced as additional liability for failure to submit documentation on controlled transactions and global documentation.

You can read the bill here

For a more detailed version of the bill submitted to the Ministry of Economic Development as well as Intercomp’s comments, please feel free to request more information: