A discussion on tax legislation pressing issues

A panel discussion, Pressing Issues of Tax Legislation, was held as part of the Gaidar Forum 2015.

The discussants were representatives of the Gaidar Institute and RANEPA (Anna Zolotareva, Svetlana Shatalova and Anastasiya Kireeva), consulting companies such as PwC (Valery Ilchenko and Maria Mikhailova), EY (Marina Belyakova), Pepelyaev Group (Vadim Zaripov) and AKIG (Yury Fedyukin and Maxim Skorokhodov).

The following issues were discussed:

• The law on taxation of the profit of controlled foreign companies effective since 2015 in Russia.

The discussants discussed the expected effect of the new rules and how they may may encourage the reversal of capital flow from offshore zones to Russia; possible strategies for companies and natural persons in response to the adoption of the law; drawbacks of the law; other policies aimed at deoffshorization of Russia's economy.

• Streamlining taxes and levies which are not covered by the Tax Code of Russia.

Russia has a series of involuntary payments of different kinds which are not covered by the Tax Code and not recognized as taxes/levies (from payment for parking to social contributions to extrabudgetary funds), however they do play the role of taxes/levies in practice and make the tax burden heavier on companies and natural persons. It would be reasonable to take stock of and evaluate such payments, as well as reflect for reference in the budget and monitor how they are spent, making them more transparent and understandable for the general public.

• The first results of the application of new transfer pricing (TP) rules.

The TP rules were established in Russia three years ago, and since then taxpayers have managed to accomplish the function of control and documentation of transactions. However, the practice shows that some of the vital issues remain to be addressed (for example, there are limited possibilities for grouping transactions, the lack of possibility to make "voluntary" symmetrical corrections, application of the TP rules to the permanent missions of foreign organizations, etc.).

• VAT taxation pressing issues.

The VAT dispute settlement practice was considered, including VAT assessment on commodities which have disappeared from a warehouse or self-service stores' shelves; the moment of VAT deduction if it hasn't been recorded in time; VAT assessment when goods are transferred for advertizing purposes; VAT assessment for awards /bonuses, etc.

• Criminal liability for tax crimes.

The discussants considered the powers of the Investigative Committee of Russia to initiate criminal cases on tax crimes and the need to improve the legislation which is applied in such cases.

Svetlana Shatalova, Head of Tax Policy Department, IAER RANEPA