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Begining in May 2018, new legislative amendments will provide authorized banks the right to refuse a transaction.

Russia's implementation of BEPS continues – this will see the automatic exchange of information between the tax authorities of different countries. 

Residents of Russia must specify fulfillment terms within contracts concluded with non-residents for foreign trade activities. Currently, banks are to be provided with the expected maximum deadlines for both the receipt of foreign currency from non-residents and the transfer of goods and services to them as stated within contracts.

 

Banks can currently refuse to process transactions only in cases when suspicions arise that the operation is being carried out for the legalization of criminal proceeds and/or the financing of terrorism.

 

Begining in May 2018, new legislative amendments will provide authorized banks the right to refuse a transaction in cases where the operation violates laws relating to:

• currency transactions between residents

• resident accounts with banks outside the Russian Federation

• rights and obligations of residents in foreign exchange transactions.

 

Banks may also refuse a transaction if legally required documents are missing or submitted in invalid or inadequate forms, or if the bank decides the transaction is contrary to any part of currency law.

 

An illegal currency transaction may result in a fine for citizens, entrepreneurs, and legal entities in the amount of 3/4 to the full amount of the illegal currency transaction; for officials - from 20 to 30 thousand rubles.

 

Penalties for late receipts of bank deposits for entrepreneurs and legal entities is a daily rate of 1/150 of the key rate of the Russian Central Bank of the amount in question and/or from 3/4 to the full amount not deposited; for officials - from 20 to 30 thousand rubles.

 

Penalties for residents who do not meet the deadline for returning to the Russian Federation amounts paid to non-residents for goods / works not imported into the country amount to, for entrepreneurs and legal entities, 1/150 of the key rate of the amount in question per day and/or 3/4 to the full amount in question; for officials - from 20 to 30 thousand rubles.

 

Officials can also be blacklisted from official employment for these violations.

 

International Exchange of Information

 

Russia's implementation of BEPS continues – this will see the automatic exchange of information between the tax authorities of different countries. A new law has been adopted that establishes rules for collecting, providing, and exchanging information about financial accounts and reporting on the financial and economic activities of multinational company groups.

 

To this end, the Tax Code of the Russian Federation is supplemented by Chapter 14.4-1 and Section VII.1. The Tax Service says that these requirements are in line with international standards that were developed by the OECD and approved by the Group of Twenty.

 

A multinational company group is a group of legal entities or an unincorporated group of structures, whose participants are simultaneously:

• linked by ownership and / or the right to control decisions;
• are tax residents of different countries;
• prepare consolidated statements.

 

New rules apply to such groups whose total annual revenue exceeds 50 billion rubles in the consolidated financial statements. Such companies are required to provide several pieces of information to the tax authorities, incl. so-called country information.

 

This country information is information about revenues, expenses, taxes, etc., received or incurred in connection with the activities of the participants of the group in Russia. It includes international and national documentation, as well as the multinational group of company's country report for the countries in which its participants are tax residents.

 

The new additions to the Tax Code of the Russian Federation provide for the provision of such country reports for fiscal years beginning in 2017, within 12 months from the end of the fiscal year. Taxpayers participating in the IGC also have the right to submit country reports voluntarily for fiscal years beginning in 2016. In this case, they will be able to avoid the secondary retrieval of accounts through subsidiaries in other countries.

 

In addition, Federal Law 340 introduced the obligation for Russian financial market institutions to identify foreign tax residents among their clients and their beneficiaries and submit annual information on their accounts to the Federal Tax Service of Russia.

 

The first reporting on accounts of non-resident clients of the Russian Federation is planned for July 31, 2018.

 

 

Translated by Alinga Consulting Group.

 

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Source: Klerk.ru