Analytics and brochures

Alongside actively developing cross-border economic, trade and customs law and adjusting to European standards and the WTO principles, Russia is seeing the adoption of rulings actually hampering foreign capital flow into the country. In January 2012, Russia’s Supreme Arbitration Court (SAC) published a ruling prohibiting taxpayers with foreign capital from deducting interest they pay on loans ‘with a foreign element’. Apart from the prospect of reducing foreign investments, this ruling may already entail considerable taxes being additionally assessed on Russian borrowers when tax audits are held.

This summer, the Russian Supreme Arbitration Court drew a line under a promissory note dispute that had dragged on since 2009. By its Resolution No. 16623/10 dated 21 June 2011  in case No. A40-120754/09-55-921, it corrected the lower courts which had considered the only lawful basis for issuing a promissory note to be, in essence, a loan relationship and which had stated that a promissory note may not be paid if issued to secure a third party’s obligation.

Property tax is levied on property treated as fixed assets for accounting purposes. However, the Russian accounting regulations (PBU 6/01) do not specify when property should be classified as fixed assets.

Foreign trade and customs regulation has been completely reformed following the creation of the Customs Union (the “CU”) of Russia, Belarus and Kazakhstan.

Amendments to the Russian Tax Code that modified the notion of tax resident for personal income tax purposes came into force on 1 January 2007. The notion is crucial for the establishment of the tax rate (13% or 30%) with respect to the income of foreign employees. To date, the re is no well-established judicial practice on the application of this article. The Russian Ministry of Finance has only recently started to develop its position on this issue and has been very cautious. In practice, this gives rise to numerous ques¬tions relating to the essence of such amendments and dif¬ferences compared to the previous procedure.

Looking back on the year gone by, let me go through the most significant events affecting taxpayers, the business climate and the Russian tax system.