30.04.08

Tax regulations are harsh on foreign shipping agents in Russia. At least, for those who are based in Poland, Belarus, and Germany. As soon as they start offering shipping and forwarding services by motor transport, and moving goods for Russian companies, they immediately become subject to profit tax, which is withheld immediately from the payment source.

This is because according to paragraph 1 of Article 209 of the TC does not equate profits from shipping agent services with profits from international transportation services.

Furthermore, these services also are not mentioned in tax treaties between Russia and the countries listed above. (If they were, it would clearly signify that forwarding companies must pay profit tax only in country of their residence.)

Fright shipping and forwarding services are unavoidably subject to profit tax if they are offered by a businesses with permanent representation in Russia. If no permanent representation has been established in Russia, a foreign company must present the tax agent responsible for paying profit tax in advance with certified confirmation that the company is located in a country participating in an international tax treaty with the RF. In this way, the company can claim a tax break under the provisions of the tax treaties.

This was explained by the Ministry of Finance in Letter # 03-08-05 from April 3, 2008.

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Source: Российский налоговый портал