Tax Compliance experts have prepared an overview of the latest sanctions by industry

04.03.2022

Taxes and sanctions

Expansion of government debt sanctions

As a result of the expansion of US sanctions against Russian government debt, US financial institutions are prohibited from any dealing (in the primary and secondary markets) with Russian ruble-denominated federal bonds or foreign currency sovereign Eurobonds issued after March 1, 2022.

The RF Ministry of Finance reacted by saying that in order to reduce the risk of forced sales of circulating government securities by certain categories of foreign investors, government bond placements after February 22, 2022 will be made through issuance of new issues of securities with cessation of additional placements of OFZ whose issues were registered before the above date.

Also as a support for the domestic market in accordance with By Order of the Government of the Russian Federation No. 335-p of February 26, 2022. The Ministry of Finance of Russia has been instructed to allocate up to 1 trillion rubles from the National Welfare Fund to purchase shares of Russian companies.

Exports and the banking sector. Special economic measures

In connection with the imposition of export sanctions against Russia by the United States, the EU and other countries, mainly aimed at depriving such sectors of Russian industry as the defense-industrial complex, aircraft and shipbuilding, the most important technological elements, as well as the introduction of sanctions against Russian banks, appropriate measures aimed at resolving the situation and minimizing the negative consequences caused by it are being developed at the legislative level.

So, By Decree of the President of the Russian Federation No. 79 of February 28, 2022. "On the application of special economic measures in connection with the unfriendly actions of the United States of America and foreign states and international organizations that have joined them", the obligation of exporters to sell 80% of foreign exchange earnings credited to their accounts from January 1, 2022, as well as to sell 80% of foreign exchange earnings, which will be received from February 28, 2022, has been introduced.

The same decree:

established a ban for residents (individuals and legal entities) to transfer foreign currency abroad under loan agreements and to credit currency to their accounts abroad;

Public joint-stock companies were allowed to buy back shares they placed on the market until December 31, 2022, provided that certain conditions are met (e.g., a 20% or more decline in stock exchange prices);

Individuals are allowed to open bank accounts without personal presence in case of necessity to change a credit institution.

Also, as a forced measure, on February 28, 2022 the Bank of Russia raised its key rate to 20% and temporarily prohibited brokers to sell securities to foreigners.

Also, Decree of the President of the Russian Federation No. 81 dated March 1, 2022 "On additional temporary economic measures to ensure the financial stability of the Russian Federation" from March 2, 2022:

it is prohibited to export foreign currency in cash from Russia in an amount exceeding $ 10 thousand and "calculated at the official exchange rate of the Central Bank of the Russian Federation established on the date of export";
a special procedure is established for a number of transactions of residents of the country with foreign persons "associated with unfriendly states". In particular, transfers of funds of residents of the Russian Federation to foreign accounts will be possible on the basis of the permission of the special legal commission;
the special procedure for transactions of residents of the Russian Federation also applies to those who are under the control of these foreign persons, "regardless of the place of their registration or the place of their primary economic activity."

IT sector support

Russian Prime Minister Mikhail Mishustin at a meeting of the Government of the Russian Federation on 02.03.2022 announced the introduction of a number of measures to support the IT sector, which:

employees of IT companies will be able to apply for a preferential mortgage, as well as get a reprieve from the army;
all Russian IT companies will be exempt from tax, currency and other state control and payment of income tax for a period of three years, and will also be able to take loans for continued work and new projects at a rate not exceeding 3%.

The relevant instructions to the Government of the Russian Federation are reflected in Decree of the President of the Russian Federation No. 83 of March 2, 2022"On measures to ensure the accelerated development of the information technology industry in the Russian Federation".

Support for individuals and legal entities

Prime Minister of Russia Mikhail Mishustin 02.03.2022 announced measures being developed by the Government of the Russian Federation to support citizens and businesses in the face of sanctions. So the Government of the Russian Federation:

will introduce a moratorium on scheduled inspections of sole proprietors, small and medium-sized businesses from March 10 to December 31, 2022;
will receive additional powers to make decisions regarding medicines faster, in particular their licensing;
for six months, it will extend the compensation of small and medium-sized businesses of commissions when using the SBP;
supported the decision to cancel VAT on precious metals for citizens from March 1;
it will help businesses protect their assets abroad, a new stage of capital amnesty will be launched;
it will extend the deadlines for paying taxes at the federal and regional levels.
It is also expected that on March 4, 2022, the State Duma will consider a plan to support the Russian economy.

State Duma passes law on fourth phase of capital amnesty

Tax Compliance experts analyzed the law on the new capital amnesty passed by the State Duma.

Bill No. 80713-8

On March 3, 2022, the Government of the Russian Federation submitted to the State Duma bill No. 80713-8. "On Amendments to Articles 4 and 45 of Part One of the Tax Code of the Russian Federation (on granting the Government of the Russian Federation separate powers)."

According to the text of the bill , it is proposed:

in 2022, the Government of the Russian Federation should be given additional powers, which imply the suspension, cancellation or postponement of tax control measures, extension of the deadlines for paying taxes, fees, insurance premiums for the period from January 1 to December 31, 2022;
in 2022, the subjects of the Russian Federation should be given the authority to issue regulatory legal acts in the field of taxes and fees and the authority to extend the deadlines for paying taxes on regional and local taxes;
to amend Article 45 of the Tax Code of the Russian Federation necessary for the implementation of the norms of the draft Federal Law "On Amendments to the Federal Law "On Voluntary Declaration by Individuals of Assets and Accounts (Deposits) in Banks and on Amendments to Certain Legislative Acts of the Russian Federation".

Bill No. 80928-8

On March 4, 2022, the State Duma of the Russian Federation adopted in the first reading bill No. 80928-8. "On Amendments to Articles 140 and 144 of the Criminal Procedure Code of the Russian Federation (on clarifying the procedure for initiating criminal cases on crimes provided for in Articles 198-199.4 of the Criminal Code of the Russian Federation)".

The draft law proposes to regulate the procedure of interaction between the authorities performing inquiry and preliminary investigation, as well as tax authorities and insurers in deciding on the initiation of the respective criminal case.

In fact, the above amendments to the Code of Criminal Procedure of the Russian Federation are intended to limit the possibility of opening criminal cases for tax crimes: it is proposed to allow investigators to open relevant criminal cases only on materials sent to them, in which the tax authority has concluded that a possible crime was committed.