TC Partner Andrei Solomyanny and TC tax consultant Sergei Ivanov spoke at the business training «Insurance of Chinese cars in Russia. Problems and Prospects». One of the organizers of the event is the National Coordination Center for International Business Cooperation. The participants of the event were representatives of Russian and Chinese companies in the field of insurance, taxation, logistics, law and banking services.

Our experts analyzed the suspension of international agreements, which has put a serious imprint on the ways of doing foreign business in the Russian Federation. For example, questions arose about the profitability of business and the expediency of doing business in the face of an increasing tax burden. 

Part of the speech was devoted to certain difficulties in settling payments coming from the Russian Federation. Foreign companies do not accept payments either due to a direct sanctions ban or due to increased bank compliance for fear of secondary sanctions.

The Russian Federation is actively introducing measures aimed at combating sanctions. For example, with respect to the provision of intra-group services by non-residents to Russian companies, a withholding tax was introduced with a rate of 15%. Now any intra-group services are subject to taxation, which brings us back to the already discussed problems of profitability and distribution of the financial burden of paying "additional" taxes.

In addition, transfer pricing measures have been seriously strengthened: the circle of persons recognized as interdependent has been expanded, fines have been increased tenfold, and the procedure for determining the marketability of prices has been changed. The cornerstone is the introduction of the concept of secondary TP adjustment, i.e. qualification of additional TP adjustments (deviations from the market price) as dividends taxable at the rate of 15%.

At the end of the presentation, our experts discussed these changes using examples from TC practice and gave recommendations on how to minimize the current risks for foreign companies.