Forte Tax & Law tax seminars in two capitals as it was
Last week was a busy week for the Forte Tax & Law team who hosted two tax seminars in St. Petersburg and in Moscow. The purpose of these events was to sum up the main tax changes that occurred in 2019 as well as prepare for the new business season and map out a plan for the coming year.
The event was first launched on Tuesday at the St. Petersburg office of the Russian-German Chamber of Commerce, followed by another seminar at the German Center for Industry and Trade in Moscow. The choice of venues was not accidental and actually coincided with the opening of a German Desk at our firm as well as with our membership of the Russian-German Chamber of Commerce.
As in previous years, the seminar program was divided into two broad topics: international and domestic taxation.
The business program was opened by Anton Kabakov, partner at Forte Tax & Law. After his welcome speech, Anton spoke about the most complex, but all the same relevant to all companies applying double taxation treaties, topic of the Multilateral Convention to Implement Tax Treaty (MLI). Anton began his presentation with the basics and explained what the convention is, who should be aware of its existence and how its ratification would affect cross-border operations. The multilateral convention entered into force in Russia on October 01, 2019 and thereby changes the existing double taxation treaties, so they cannot be applied now without considering the MLI provisions. Oddly enough, the fact that it is now necessary to apply the convention was a surprise for many guests attending the seminar. Anton walked through the application of the MLI in detail and showed how to do so with specific examples.
Anton also shed some light on the latest developments in transfer pricing and spoke about the changes made to the Tax Code regarding the functional analysis and comparability analysis for transactions with intangible assets. He also referred to court practice and gave an update on how a protracted transfer pricing case ended.
Natalya Vorobieva, associate at Forte Tax & Law, continued with the topic of international taxation, shedding some light on the concept of actual right to income in intercompany transactions. Natalya reviewed the latest court practice on this topic and identified the main trends in the conclusions drawn by courts from disputes between taxpayers and tax authorities. The unresolved issue of application of the look-through approach in case of change in the type of income was the subject of a heated discussion among the guests.
Natalya also addressed the trend that arose last year, consisting in requalifying active income as passive in cross-border transactions. As court practice shows, this trend has not slowed down, and in most cases, courts continue to support tax authorities.
Robert Gurdyumov, senior associate at Forte Tax & Law, ended the event with a presentation on changes and trends in domestic taxation.
Robert referred to Article 54.1 of the Russian Tax Code about unjustified tax benefit and described how tax authorities apply its provisions in practice. As Robert noted, this much talked about article is not in fact so terrible, and although there are not so many practical principles for its application, due diligence is nevertheless still required.
Robert also provided a brief overview of the most important – in our opinion – amendments to tax law that will become effective next year.
If you would like to review the presentations made by the speakers at these events, please feel free to email Daria Voskova