GLG published its 2014 edition of the ICLG: Corporate Tax which has been fully revised and updated to cover the key issues of current applicable regulation, including full analysis of important aspects of cross-border transactions and international law. With contributions from over 40 leading law firms worldwide, the guide offers concise and comprehensive guidelines for global investors operating across various jurisdictions. Lidings’ partner, head of Tax and Customs practice Stepan Guzey has authored exclusive coverage of Russian regulation.

1. The International Comparative Legal Guide to:
Corporate Tax 2014
10th Edition
A practical cross-border insight into corporate tax work
Published by Global Legal Group, with contributions from:
Advokatfirma Ræder DA
Aivar Pilv Law Office
Ali Budiardjo, Nugroho, Reksodiputro
Arqués Ribert Junyer Advocats
Avanzia Taxand Limited
B.C. Toms & Co
Batliner Gasser
Bentsi-Enchill, Letsa & Ankomah
Boga & Associates
Bredin Prat
Bulit Goñi & Tarsitano
Calderón, González y Carvajal, S.C.
CASAHIERRO Abogados
Debarliev, Dameski and Kelesoska
DELACOUR Law Firm
Georgiev, Todorov & Co.
Gide Loyrette Nouel
Glyn Marais Incorporated
Greenwoods & Freehills
Ikeyi & Arifayan
Juridicon Law Firm
Khaitan & Co
Kilpatrick Townsend & Stockton Advokat KB
Kyriakides Georgopoulos Law Firm
Legance
Lenz & Staehelin
Lex Chambers Ltd
Lidings
LOGOS Legal Services
Mason Hayes & Curran
Mattos Filho, Veiga Filho, Marrey Jr. E Quiroga Advogados
MNKS
Nagashima Ohno & Tsunematsu
Nithya Partners
P+P Pöllath + Partners
Paul, Weiss, Rifkind, Wharton & Garrison LLP
Pekin & Pekin
Slaughter and May
Thorsteinssons LLP
Uría Menéndez
Vanhaute Attorneys

2. The International Comparative Legal Guide to: Corporate Tax 2014
General Chapter:
1
The X Factor – William Watson, Slaughter and May
1
Country Question and Answer Chapters:
Contributing Editor
William Watson,
Slaughter and May
Account Managers
Beth Bassett, Maksim
Dolgusev, Robert
Hopgood, Dror Levy,
Maria Lopez, Mahmoud
Nedjai, Florjan Osmani,
Oliver Smith, Rory Smith
2
Albania
Boga & Associates: Alketa Uruçi & Andi Pacani
3
Andorra
Arqués Ribert Junyer Advocats: Daniel Arqués i Tomàs & Mireia Ribó i Bregolat
12
4
Argentina
Bulit Goñi & Tarsitano: Alberto Tarsitano & María Inés Giménez
19
5
Australia
Greenwoods & Freehills: Adrian O’Shannessy & Andrew Mills
26
6
Belgium
Vanhaute Attorneys: Patrick Vanhaute
33
7
Brazil
Mattos Filho, Veiga Filho, Marrey Jr. E Quiroga Advogados:
Luiz Felipe Centeno Ferraz & Renata Correia Cubas
42
Sales Support Manager
7
Toni Wyatt
Sub Editors
Nicholas Catlin
Barbara Fitzsimons
8
Bulgaria
Georgiev, Todorov & Co.: Georgi Kostolov
48
9
Canada
Thorsteinssons LLP: Michael Colborne & Michael McLaren
54
10 Denmark
DELACOUR Law Firm: Morten Brehm Jensen & Kristian Tokkesdal
59
Beatriz Arroyo
Gemma Bridge
11 Estonia
Aivar Pilv Law Office: Jaak Siim & Epp Lumiste
65
Senior Editor
12 France
Bredin Prat: Yves Rutschmann & Marion Méresse
74
13 Germany
P+P Pöllath + Partners: Dr. Michael Best & Dr. Nico Fischer
81
Alan Falach
14 Ghana
Bentsi-Enchill, Letsa & Ankomah: Seth Asante & Frank Nimako Akowuah
88
Group Publisher
15 Greece
Kyriakides Georgopoulos Law Firm: Panagiotis Pothos
94
16 Iceland
LOGOS Legal Services: Bjarnfreður Ólafsson
101
17 India
Khaitan & Co: Sanjay Sanghvi & Ritu Shaktawat
106
18 Indonesia
Ali Budiardjo, Nugroho, Reksodiputro: Freddy Karyadi
112
19 Ireland
Mason Hayes & Curran: John Gulliver & Robert Henson
117
20 Italy
Legance: Marco Graziani & Claudia Gregori
124
F&F Studio Design
21 Japan
Nagashima Ohno & Tsunematsu: Yuko Miyazaki & Kenji Horiuchi
134
GLG Cover Image Source
22 Kosovo
Boga & Associates: Alketa Uruçi & Andi Pacani
143
23 Liechtenstein
Batliner Gasser: Dr. Christian Presoly & Benedikt Koenig
147
24 Lithuania
Juridicon Law Firm: Laimonas Marcinkevičius & Ingrida Steponavičienė
154
25 Luxembourg
MNKS: Raquel Guevara & Remi Slama
163
26 Macedonia
Debarliev, Dameski and Kelesoska: Dragan Dameski & Elena Nikodinovska
170
27 Malta
Avanzia Taxand Limited: Walter Cutajar & Mary Anne Inguanez
175
28 Mexico
Calderón, González y Carvajal, S.C.: Alejandro Calderón Aguilera &
Arturo Carvajal Trillo
182
29 Nigeria
Ikeyi & Arifayan: Nduka Ikeyi & Taofeek Shittu
188
30 Norway
Advokatfirma Ræder DA: Rolf H. Nicolaissen & Sigurd G. Tuntland
194
31 Peru
CASAHIERRO Abogados: Percy Castle & Fabrizio Fernandez-Dávila
200
32 Poland
Gide Loyrette Nouel: Maciej Grela & Ewa Żbikowska
206
33 Russia
Lidings: Stepan Guzey, PhD
212
34 Rwanda
Lex Chambers Ltd: Isaac Mockey Bizumuremyi
216
Editors
Suzie Kidd
Group Consulting Editor
Richard Firth
Published by
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Copyright © 2013
Global Legal Group Ltd.
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ISBN 978-1-908070-78-4
ISSN 1743-3371
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Continued Overleaf
Further copies of this book and others in the series can be ordered from the publisher. Please call +44 20 7367 0720
Disclaimer
This publication is for general information purposes only. It does not purport to provide comprehensive full legal or other advice.
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This publication is intended to give an indication of legal issues upon which you may need advice. Full legal advice should be taken from a qualified
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3. The International Comparative Legal Guide to: Corporate Tax 2014
Country Question and Answer Chapters:
35 South Africa
Glyn Marais Incorporated: Richard William Douglas Glyn & Richard Charles Wilson
220
36 Spain
Uría Menéndez: Rafael Fuster & Alonso Ramallo
226
37 Sri Lanka
Nithya Partners: Naomal Goonewardena & Sheranka Madanayake
233
38 Sweden
Kilpatrick Townsend & Stockton Advokat KB: David Björne
239
39 Switzerland
Lenz & Staehelin: Heini Rüdisühli & Jean-Blaise Eckert
246
40 Turkey
Pekin & Pekin: Fırat Yalçın & Mehmet Onur Çeliker
255
41 Ukraine
B.C. Toms & Co: Bate C. Toms
263
42 United Kingdom
Slaughter and May: Zoe Andrews & William Watson
272
43 USA
Paul, Weiss, Rifkind, Wharton & Garrison LLP: Jeff Samuels & Brad Okun
279
EDITORIAL
Welcome to the tenth edition of The International Comparative Legal Guide
to: Corporate Tax.
This guide provides the international practitioner and in-house counsel with a
comprehensive worldwide legal analysis of the laws and regulations of
corporate tax.
It is divided into two main sections:
One general chapter. This chapter discusses what makes the difference between
acceptable tax mitigation and unacceptable tax avoidance.
Country question and answer chapters. These provide a broad overview of
common issues in corporate tax laws and regulations in 42 jurisdictions.
All chapters are written by leading corporate tax lawyers and industry
specialists and we are extremely grateful for their excellent contributions.
Special thanks are reserved for the contributing editor William Watson of
Slaughter and May for his invaluable assistance.
Global Legal Group hopes that you find this guide practical and interesting.
The International Comparative Legal Guide series is also available online at
www.iclg.co.uk.
Alan Falach LL.M.
Group Consulting Editor
Global Legal Group
Alan.Falach@glgroup.co.uk

4. Chapter 33
Russia
Lidings
1 Tax Treaties and Residence
1.1
How many income tax treaties are currently in force in
Russia?
There are 80 (eighty) treaties on the avoidance of double taxation in
Russia currently in force with various countries, including the UK,
the USA, Japan, China, Singapore and others. The latest of them
was concluded between the Russian Federation and Malta on the
24th of April 2013.
Stepan Guzey, PhD
2 Transaction Taxes
2.1
Are there any documentary taxes in Russia?
Yes. For example, in accordance with the Tax Code, state duties are
deemed as documentary taxes.
2.2
Do you have Value Added Tax (or a similar tax)? If so, at
what rate or rates?
Yes, they follow the OECD.
The tax system in the Russian Federation includes Value Added
Tax (VAT) at three rates: 0%; 10%; and 18%. Each rate
corresponds to different types of taxable items and/or respective
trade procedures.
1.3
2.3
1.2
Do they generally follow the OECD or another model?
Do treaties have to be incorporated into domestic law
before they take effect?
Is VAT (or any similar tax) charged on all transactions or
are there any relevant exclusions?
In accordance with Russian domestic law, treaties on aspects of
taxes which change acting tax legislation are subject to be
incorporated through ratification.
In general, all transactions are VAT taxable (such as the transfer of
the right of ownership, execution of works, rendering of services,
transfer of goods, and execution of works and rendering of services
for self-interest purposes).
1.4
At the same time, under arts. 145, 145.1, 149 and 150 of the Tax
Code, some transactions are directly excluded from VAT taxation
i.e. the sale of specific types of goods (i.e. medical devices and
drugs, basic consumer goods), property leases to foreign entities
(in accordance with a special list approved by the Ministry of
Finance), exclusion from VAT taxation of specific types of
taxpayers, etc.
Do they generally incorporate anti-treaty shopping rules
(or “limitation on benefits” articles)?
No, but Russia has started a DTT amendments campaign aimed at
including “limitation on benefits” articles.
1.5
Are treaties overridden by any rules of domestic law
(whether existing when the treaty takes effect or
introduced subsequently)?
2.4
Is it always fully recoverable by all businesses? If not,
what are the relevant restrictions?
Generally no, but court practice allows for DTT provisions to be
overridden when they breach public order or the sovereign interests
of the state.
VAT in Russia is a recoverable tax, with respective restrictions
deriving from the use of special tax regimes by taxpayers.
1.6
2.5
What is the test in domestic law for determining corporate
residence?
Are there any other transaction taxes?
No, there are no other transaction taxes.
A company is deemed to be a tax resident of the respective state if
it has been duly and lawfully established under the state’s corporate
laws.
2.6
Are there any other indirect taxes of which we should be
aware?
Excise duties and customs duties are forms of indirect taxation in
Russia.
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5. Lidings
3.1
Is any withholding tax imposed on dividends paid by a
locally resident company to a non-resident?
Yes, dividend payments from residents to non-residents are taxable
at a 15% flat rate. An exemption from this rule derives from DTT
and taxpayers could benefit from a 5% to 10% reduction in tax
rates.
3.2
Would there be any withholding tax on royalties paid by a
local company to a non-resident?
Income from the use of the Russian Federation in the rights of
intellectual property (royalties) are included in the list of taxable
incomes at the source. The tax rate is 20%. This rate can be
adjusted by a DTT between Russia and the country of a nonresident company incorporation, which varies from 0% to 15%.
“controlled” transactions by the tax authorities in the case that the
terms of transactions greatly differ from common market practice.
4 Tax on Business Operations: General
4.1
The headline rate of tax on corporate profits is 20%.
4.2
Would there be any withholding tax on interest paid by a
local company to a non-resident?
The standard tax rate for interest payments is 20%, but this can be
reduced by DTT. Reduced rates vary from 0% to 15%.
3.4
Would relief for interest so paid be restricted by reference
to “thin capitalisation” rules?
Under recent court practice, interest payments that formally could
be excluded from taxation must, in fact, be taxed with the respective
reference to “thin capitalisation” rules, but only in cases when the
DTT does not directly stipulate so-called unlimited relief.
3.5
If so, is there a “safe harbour” by reference to which tax
relief is assured?
When the DTT directly stipulates unlimited relief, the taxpayer
could benefit from a zero tax rate on interest payments.
3.6
Would any such rules extend to debt advanced by a third
party but guaranteed by a parent company?
No, they would not.
3.7
4.4
If the tax base is accounting profit subject to adjustments,
what are the main adjustments?
Tax and accounting adjustments are not the same, so one must refer
to the Tax Code rules regarding appropriate tax adjustments of the tax
base. An example of accounting adjustment of the corporate tax base
is depreciation, which is calculated under accounting profit rules.
4.5
Are there any tax grouping rules? Do these allow for
relief in Russia for losses of overseas subsidiaries?
In Russia, there is a structure of a consolidated group of taxpayers.
It is implemented to minimise tax. Also, the primary responsibility
for the calculation and payment of corporate income tax, the
payment of fines and penalties, as well as reporting to the tax
authorities the appropriate tax return per person belongs to the
responsible party of the consolidated group of taxpayers.
Nevertheless, these rules do not allow relief for losses of foreign
subsidiaries.
Are there any other restrictions on tax relief for interest
payments by a local company to a non-resident?
No, there are no other restrictions.
Is there any withholding tax on property rental payments
made to non-residents?
If a non-resident pays taxes in Russia, these rental payments can be
deducted from the total revenue and reduce the tax on corporate
profits.
3.9
Is the tax base accounting profit subject to adjustments,
or something else?
As a general rule, the corporate income tax base is not the same as
accounting profit. The Tax Code stipulates special rules for
corporate income tax base calculation and also defines revenue and
expenses and establishes what cannot be classified as expenses.
4.6
3.8
When is that tax generally payable?
The tax period is the calendar year but taxpayers are obliged to
make an advance payment during reporting periods over 3, 6 and 9
months of the year. At the end of the tax period, taxpayers adjust
payments by making additional payments or by claiming
overpayments back.
4.3
3.3
What is the headline rate of tax on corporate profits?
Russia
3 Cross-border Payments
Russia
Does Russia have transfer pricing rules?
Yes, Russia has introduced new transfer pricing rules since the 1st
of January 2012. However there is no clear practice at this time and
a potential risk of this is a recalculation of taxes under such
Is tax imposed at a different rate upon distributed, as
opposed to retained, profits?
There is no difference in the tax rate, which is generally 20%.
However, a subject of the Russian Federation can reduce this tax
rate to 16.5%.
4.7
Are companies subject to any other national taxes
(excluding those dealt with in “Transaction Taxes”) - e.g.
tax on the occupation of property?
Other national taxes are of a special character and are not applied
by default to companies; among them are excise duties, state duty,
subsoil extraction tax, water tax, and duties for the use of natural
biological resources.
ICLG TO: CORPORATE TAX 2014
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213

6. Lidings
4.8
Are there any local taxes not dealt with in answers to
other questions?
Russia
There are other local taxes among which the most important are
corporate property tax, transport tax, land tax and gambling tax.
Russia
corporate profit tax is levied according to the general rule: the tax is
based on the total revenue of the branch minus the total expenses of
the branch.
6.4
Would such a branch be subject to a branch profits tax (or
other tax limited to branches of non-resident companies)?
5 Capital Gains
5.1
Is there a special set of rules for taxing capital gains and
losses?
Corporate profit tax rules do cover the taxation of capital gains and
losses. Mentioned rules apply to the profit-making assets of the
investor. The capital gain appears when the assets are sold at a
higher price in comparison to the one at which they were acquired.
Also, if those assets earn interest, that will also be considered a
capital gain.
5.2
If so, is the rate of tax imposed upon capital gains
different from the rate imposed upon business profits?
In Russia there is no special branch profits tax. The branch would
be taxed under the general rules based on the branch’s activities in
Russia.
6.5
Would a branch benefit from double tax relief in its
jurisdiction?
No, it would not benefit.
6.6
Would any withholding tax or other similar tax be imposed
as the result of a remittance of profits by the branch?
The branch shall pay all taxes before remittance of profits to the
company abroad.
No, general rules apply.
7 Overseas Profits
5.3
Is there a participation exemption for capital gains?
There are some exemptions from the general rule, for example the
shares and quoted shares in high-technology Russian companies
acquired after the 1st of January 2011 and held for more than 5 years
are exempted from capital gains.
5.4
Is there any special relief for reinvestment?
7.1
Under the general rule of art. 311 of the Tax Code, Russia taxes
global income but taxes paid by an overseas branch are credited in
an amount no larger than tax to be paid in Russia.
7.2
No, there is no special relief for reinvestment.
5.5
Does Russia impose withholding tax on the proceeds of
selling a direct or indirect interest in local assets/shares?
No, this is not imposed in Russia.
6 Local Branch or Subsidiary?
6.1
What taxes (e.g. capital duty) would be imposed upon the
formation of a subsidiary?
A subsidiary is a separate legal entity and is personally liable for its
own taxation. The mother company is not taxable by special taxes
upon the formation of a subsidiary.
6.2
Are there any other significant taxes or fees that would be
incurred by a locally formed subsidiary but not by a
branch of a non-resident company?
As a separate legal entity, a subsidiary formed under Russian law
will be obliged to pay all national and local taxes deriving from its
activities in Russia and abroad.
6.3
How would the taxable profits of a local branch be
determined in its jurisdiction?
Does Russia tax profits earned in overseas branches?
Is tax imposed on the receipt of dividends by a local
company from a non-resident company?
Yes. The taxation of dividends is based on the application of tax
rates of 9% (general rule) and 0% (particular cases).
7.3
Does Russia have “controlled foreign company” rules
and, if so, when do these apply?
No, Russia does not have “controlled foreign company” rules.
8 Taxation of Real Estate
8.1
Are non-residents taxed on the disposal of real estate in
Russia?
Foreign companies are recognised as real estate tax payers in Russia
when they own land and real estate without exemptions.
8.2
Does Russia impose tax on the transfer of an indirect
interest in real estate located in Russia and, if so, what
constitutes an indirect interest?
All transactions involving real estate where the property is
transferred shall be taxed, and the same goes for cases where real
estate is “packed” and sold, for example indirectly as an LLC stocks
transaction.
VAT shall be charged in the same way as for Russian companies and
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ICLG TO: CORPORATE TAX 2014
© Published and reproduced with kind permission by Global Legal Group Ltd, London

7. Lidings
Does Russia have a special tax regime for Real Estate
Investment Trusts (REITs) or their equivalent?
No, Russia does not have a special tax regime for Real Estate
Investment Trusts (REITs).
9.2
Is there a requirement to make special disclosure of
avoidance schemes?
If a company is subject to transfer pricing control then it is obliged
to make appropriate disclosures.
Russia
8.3
Russia
9 Anti-avoidance
9.1
Does Russia have a general anti-avoidance or anti-abuse
rule?
Yes, transfer pricing and thin capitalisation rules are regarded as
general anti-avoidance rules in Russia.
Stepan Guzey, PhD
Lidings
Naberezhnaya Tower Block C
Presnenskaya nab. 10
Moscow, 123317
Russia
Tel:
Fax:
Email:
URL:
+7 495 989 44 10
+7 495 989 44 20
SGuzey@lidings.com
www.lidings.com
Partner, Head of Tax and Customs Practice
Stepan Guzey, PhD chairs the Tax and Customs Practice Group
at Lidings’ Moscow office. His practice focuses on tax consulting
in regard to common business activities, assets and share capital
deals with emphasis on tax treaties, cross-border taxation,
transfer pricing and some EC tax law issues. With over ten years
of experience he has acted as legal adviser on a wide variety of
projects involving corporate financing and integrated support of
investment projects. His experience includes consulting on
corporate and individual finance and taxation matters and
representing clients in tax disputes. As a certified tax adviser and
an expert in Russian tax and customs law, Stepan has
represented clients in complex projects including trade and export
finance, corporate restructuring, project finance and PPP, and
advised on tax aspects of M&A and regulatory matters across a
wide range of industry sectors.
Lidings is a leading independent national law firm with a broad base of clientele in Russia and the CIS. The firm advises its
predominantly international clients from its two offices in Moscow and St. Petersburg.
Since its launch in the mid-2000s, the firm has achieved impressive growth and built a noteworthy reputation. Lidings has followed
a consistent strategy of growth to become a high quality provider of legal services with a clear focus to advise, almost exclusively,
international businesses active in Russia and the CIS. It has also been successful in establishing sector expertise in certain
industries where global investors play an important part, such as Pharmaceutical and Life Sciences, Automotive, Energy and
Aviation.
The firm’s significant footprint, accompanied by a growing degree of brand reputation in the domestic markets, has been
recognised by a series of awards from independent global market analysts like The Legal 500 EMEA, Chambers and Partners,
ILFR1000 and Martindale-Hubbell.
ICLG TO: CORPORATE TAX 2014
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8. Other titles in the ICLG series include:
Alternative Investment Funds
Aviation Law
Business Crime
Cartels & Leniency
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Commodities and Trade Law
Competition Litigation
Corporate Governance
Corporate Recovery & Insolvency
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Dominance
Employment & Labour Law
Enforcement of Competition Law
Environment & Climate Change Law
Insurance & Reinsurance
International Arbitration
Lending and Secured Finance
Litigation & Dispute Resolution
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