Tax Compliance tax consultant Ekaterina Kopylova commented on the events of January in the tax sphere in the review of Pravo.ru.

International taxation

In the field of international taxation two events can be noted. First, as of 01.01.2024, the double taxation agreements with Latvia and Denmark officially expired. Secondly, the real reasons for the delay in negotiations on the conclusion of LEDN between the Russian Federation and the UAE have been made public. As noted by the media, the UAE did not triple the proposed withholding tax rates, representatives of this state intend to conclude the Agreement on terms at least similar to those enshrined in the existing treaties of the Russian Federation with Saudi Arabia and Qatar. In turn, the Russian Ministry of Finance proposed that Saudi Arabia and Qatar enter into negotiations to revise the SIDN.

Businesses and specialists will closely follow the negotiations and are interested in concluding a SIDN with the UAE on acceptable terms as soon as possible

Laws and bills

In January 2024, lawmakers considered two tax initiatives. A bill regulating the tax consequences of the spin-off of UIF assets blocked due to sanctions was considered and passed. The proposed changes would allow taxpayers not to determine the financial result when transferring UIF assets to an additional fund or changing the type of fund to a closed fund, and to retain the right to an investment tax deduction.

Also, in pursuance of the Resolution of the Constitutional Court of the Russian Federation No. 28-P of 31.05.2023, a draft law has been submitted to the State Duma to establish the priority of payment of taxes in bankruptcy when selling property constituting the debtor's bankruptcy estate.

The Draft determines that income tax and VAT are payable in priority to the claims of other creditors "out of turn" as part of current payments, and also provides for a special "substitution mechanism" to ensure the rights of first and second priority creditors.

We hope that the legislative consolidation of the adopted decision will minimize the number of cases on the resolution of disagreements between the parties to the bankruptcy case in terms of taxation.

In addition, in January 2024, the judges of the Supreme Court of the Russian Federation referred several interesting tax disputes to the SCEC of the Supreme Court of the Russian Federation:

• On the insurer's obligation to pay insurance indemnity taking into account the amount of VAT payable on the restoration of damaged property by the policyholder (beneficiary).[1]
• On the right to pay insurance contributions at reduced rates and the exclusion from the base for insurance contributions of the amount of payment in the form of compensation for the use of employees' personal property.[2]
• On the possibility of applying a reduced rate of land tax in respect of land plots used as investment assets of a fund.[3]
• On the lawfulness of additional withholding tax on dividends in the case of an increase in authorized capital at the expense of retained earnings of a Russian company. [4]

We look forward to the consideration of these cases and the publication of the legal positions of the Supreme Court of the Russian Federation on these issues.

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[1] On the complaints of OOO Gazprom transgaz Saratov and OOO Gazprom transgaz Ukhta (Determination of the Supreme Court of the Russian Federation of 17.01.2024 No. 305-ES23-25504 in case No. A40-255645/2022, Determination of the Supreme Court of the Russian Federation of 15.01.2024 No. 305-ES23-22426 in case No. A40-232030/2022, Determination of the Supreme Court of the Russian Federation of 23.01.2024 No. 305-ES23-24306 in case No. A40-226626/2022).

[2] On the complaint of LLC "Agricultural Enterprise "Ponizovye MDC" (Definition of the Supreme Court of the Russian Federation from 24.01.2024 № 306-ES23-25757 in case № A06-461/2022)

[3] On the complaint of LLC "Managing Company "Universal Investments" (Determination of the Supreme Court of the Russian Federation from 16.01.2024 № 305-ES23-24042 in case № A40-143580/2021)

[4] On the complaint of JSC "Mir Business Bank" (Determination of the Supreme Court of the Russian Federation from 24.01.2024 № 305-ES23-22721 in case № A40-243943/2022)