The Chamber of Commerce called the tightening of control over cross-border transactions discrimination

The Chamber of Commerce and Industry (CCI) of Russia opposed the intentions of the Ministry of Finance to tighten control over cross-border transactions of domestic companies. If the department’s proposal is accepted, the Federal Tax Service will receive new powers and will be able to set increased tax rates for Russian companies. According to the association, changes in legislation will worsen “the already difficult situation of taxpayers.”

“Such an approach would actually mean double taxation of the same amount,” says the comments sent by the Chamber of Commerce to the draft law of the Ministry of Finance (quoted from Forbes).

The Chamber of Commerce and Industry drew attention to the fact that the toughening of liability will not affect similar violations in transactions between Russian companies. The Chamber of Commerce also fears that the Federal Tax Service (FTS) will be guided by formal signs when monitoring cross-border transactions, which may lead to unjustified charging of too high taxes to firms.

Ministry of Finance of the Russian Federation earlier proposed introduce strict control measures and toughen liability for price manipulation in transactions between interdependent Russian and foreign companies. The Ministry of Finance considers it necessary to make such amendments to the Tax Code. It will be possible to increase rates for companies if a company from the Russian Federation transfers to a foreign company the cost of delivered goods or services at an “unreasonably high price”. Then the benefit of a foreign company will be equated to the payment of dividends and taxed at 15%.

As Roman Gusak, a lawyer at Forward Legal, explained to Kommersant, the changes are aimed at combating tax evasion in the formation of profit centers outside the Russian Federation. Entrepreneurs, due to sanctions to preserve supply chains, have become more likely than before to create intermediary companies abroad.

Read more in the material “Kommersant” “Inflated Dividends”.

Alexander Kislov