Deadline for submitting notices of participation in multinational groups of companies is coming up soon
Forte Tax & Law would like to remind Russian companies that are part of international holdings that the deadline for submitting notices of participation in multinational groups of companies is coming up soon.
Key points
On the back of the international trend intent on combatting tax base erosion and profit shifting, Russia has since 2018 provided for stricter reporting requirements for Russian companies that are part of large multinational groups. For more information, click here.
One of these additional requirements is the obligation for Russian companies that are part of multinational groups to notify Russian tax authorities that they are part of such groups.
Who has to fulfill the obligation to submit a notice of participation in multinational groups?
As a general rule, all Russian taxpayers that are part of a multinational group must submit a notice of participation in multinational groups[1]. This obligation applies not only to Russian but also to foreign companies that are tax residents in Russia, as well as to Russian permanent establishments of foreign companies.
Small and medium group exemption
Relatively small multinational groups, however, are exempted from this obligation provided their turnover for the previous financial year does not exceed:
- RUB 50 billion if the parent company is a Russian tax resident;
or
- The amount set by the foreign country of tax residence of the parent company for the obligation to submit country-by-country reporting (usually EUR 750 million)[2].
What are the deadlines for notification?
Notices for participation in multinational groups should be submitted to Russian tax authorities every year within 8 months of the end date of the parent company’s financial year. So, if the parent company’s financial year coincides with the calendar year, the deadline for submission of notices of participation in multinational groups for 2017 will be August 31, 2018.
What to do if several companies from the same multinational group operate in Russia?
If a multinational group is represented in Russia by several companies, then one of these companies may submit the notice of participation in multinational groups for all the other companies of the group operating in Russia. Such practice should ease the administrative burden on the group. However, in order for a single company[3] to submit the notice of participation in multinational groups for all the participants in this group recognized as taxpayers in Russia, the parent company must first authorized one of its Russian companies to do so. In this case, the remaining Russian taxpayers that are part of this group will not be required to submit a separate notice of participation in multinational groups[4].
Liability for failure to notify
Failure to notify or late notification of participation in multinational groups could result in the imposition of a fine of RUB 50,000 on companies[5] and a fine of up to RUB 500 on company head or chief accountant[6]. It is important to note that if a company head who happens to be a foreign national is subject to administrative fines, this could hinder that person in obtaining and/or renewing a Russian work visa as well as entering Russia.
Please feel free to contact us if you need any assistance with notices of participation in multinational groups.
And, if you have any questions or would like to discuss this matter further, please feel free to contact Anton Kabakov.
Truly yours,
[1] Article 105.16-1(2) and Article 105.16-2(1) Tax Code
[2] Article 105.16-2(7) Tax Code
[3] Or so-called authorized participant in international group
[4] Article 105.16-2(2(2)) and Article 105.16-2(3) Tax Code
[5] Article 129.9 Tax Code. Sanctions do not apply if these offenses are identified for reporting periods 2017-2019.
[6] Article 15.6 Code of Administrative Offenses