Recent significant changes in tax legislation
Tax exemptions for movable property
Starting from 2019, movable property is not subject to property tax. Consequently, the issue of correct classification of an asset (movable or immovable) becomes a hot topic for taxpayers. Note that the relevant court practice is not consistent, and Russian lawmakers are working on amendments to the Russian Civil Code that may introduce clear criteria of immovable property.
20% value-added tax (VAT) rate will apply starting from 1 January 2019
The VAT rate is increased from 18% to 20%. The new rate will apply to goods (work, services) and property rights that were shipped (performed, provided, or transferred) after 1 January 2019. The procedure for applying the reduced VAT rate of 10% remains unchanged. This rate applies to certain types of products, including food products (with the exception of specialty foods), children’s goods, pharmaceuticals, and medical devices, as well as printed periodicals and books (with the exception of advertising and erotica).
VAT registration for foreign suppliers of digital services
Starting from 1 January 2017, foreign suppliers of digital services (i.e. certain listed services rendered mainly via the Internet) are liable to register for VAT in Russia and pay VAT on supplies made to Russian individual customers.
Starting from 1 January 2019, VAT registration and payment obligation also applies for foreign service providers rendering digital services to Russian business customers. The providers are required to submit application for VAT registration not later than 15 February 2019 and further submit quarterly VAT returns and pay applicable VAT by themselves.
Transfer pricing control of domestic and foreign transactions is reduced
The list of controlled domestic transactions has been significantly reduced and now mainly remains when one party of the transaction applies certain tax incentives.
Transactions with foreign related counterparties are viewed as controlled since 1 January 2019, provided that their turnover exceeds the threshold of 60 million Russian rubles (RUB).