The Ministry of Finance of the Russian Federation announced that the multilateral Convention on countering the base erosion and profit shifting (–commonly known as the BEPS Convention) will be applied in Russia not earlier than January 1, 2021.
Let us recall that Russia ratified the multilateral BEPS Convention in 2019. This means that, in addition to conditions that are contained in the Double Taxation Avoidance Agreements (DTAA), companies will have to check with the rules of the Convention when paying income (dividends, interest or royalties) on which tax is withheld at source in the Russian Federation.
The application of the BEPS Convention to a specific international agreement is only possible if the DTAA partner state has ratified such Convention and has included the Russian Federation in the list of jurisdictions to which the Convention will be applied.
Owing to the fact that both the Russian Federation and its DTAA partners have not completed all stages of the reconciliation procedures, the application of the BEPS Convention for taxes at source in the Russian Federation will begin not earlier than January 1, 2021, while for other taxes the application will start not earlier than January 1, 2022.
The BEPS Convention covers 71 Double Taxation Avoidance Agreements. The full list of countries with respect to which the Convention is applicable is specified in Federal Law No. 79-FZ dated May 1, 2019.
On the issue of the application of provisions of DTAA and the BEPS Convention, please contact Acsour’s experts.