Recent significant changes in tax legislation
These significant changes to the Russian tax law apply from 1 January 2019:
- Movable property is not subject to property tax. Russian corporate taxpayers still wait for clear rules of classification (movable/immovable).
- The standard value-added tax (VAT) rate increased from 18% to 20%.
- Domestic transactions are not subject to transfer pricing control anymore (with some exceptions).
- Transactions with foreign related counterparties may be controlled only if the turnover exceeds 60 million Russian rubles (RUB).
Russia ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ('Multilateral Instrument' or MLI) in the second quarter of 2019. It means that starting from 2020 when paying passive income abroad and withholding tax, tax agents have to consider both double tax treaty (DTT) and MLI provisions (in most cases, the Principle Purpose Test should be passed).
Since 1 July 2019, input VAT may be recovered in relation to export of many types of services, including software development, consulting, legal, and marketing services (with some exceptions), despite the absence of output VAT on rendering such services.