New changes in the rules for the exchange of tax information with foreign countries

Legal Digest News
The Federal Tax Service has updated the list of foreign states and territories that do not provide for the exchange of tax information with the Russian Federation.

The specified list was approved by Order of the Federal Tax Service dated December 1, 2023 No. ED-7−17/914 and supplemented by the following countries:

  • Germany;
  • Latvia;
  • Switzerland;
  • Ukraine.
  • United Kingdom of Great Britain and Northern Ireland;
  • USA;

Countries such as Antigua and Barbuda, Vanuatu, Ghana, Grenada, Maldives, Oman, Peru, as well as the territories of Curacao and the Cook Islands were excluded from the list.

Taking into account the changes, the number of countries in the list is 88 (previously 89), and territories — 14 (previously 16).

The presence of a country on such a list entails tax consequences for Russian tax residents. Since in the absence of a country in such a list, the profit of the same controlled foreign company is exempt from taxation if its permanent location is a state with which Russia has an international tax treaty.

The Federal Tax Service also issued Order No. ED-7−17/915 dated December 1, 2023, which approved a list of states that allow systematic non-fulfillment of obligations for the automatic exchange of country reports.

As a general rule, international groups of companies are required to submit an annual country report for the previous financial year. International groups of companies' participants may not submit this report if the parent company of international groups of companies reports in one of the countries with which the Federal Tax Service has established an automatic exchange of such reports. For these purposes, the regulatory authorities maintained an up-to-date list of countries with which country reports were automatically exchanged.

However, since the publication of the new Order, the automatic exchange of country reports will continue, but at the same time, systematic non-fulfillment of obligations under such an exchange is allowed. The specified list includes 21 States, namely:

  • Australia
  • Austria
  • Belgium
  • Cyprus
  • Denmark
  • Finland
  • France
  • Germany
  • Greece
  • Ireland
  • Italy
  • Japan
  • Luxembourg
  • Netherlands
  • Norway
  • Poland
  • Portugal
  • Romania
  • Slovenia
  • Spain
  • Sweden

At the same time, the Russian participants of the international groups of companies, whose parent companies are located in the states included in the new Order, have additional obligations to the Federal Tax Service of Russia, namely, the submission of a country report at the request of the Federal Tax Service.

To fulfill such a requirement, taxpayers will need to prepare and submit a Country Report in a timely manner (no later than three months from the date of receipt of the request) in electronic format in accordance with the requirements for the preparation of an XML schema of a country report established by Order of the Federal Tax Service of Russia dated March 6, 2018 No. MMV-7−17/123.

For failure to submit a country report or submission of a document containing inaccurate or erroneous information, liability under Article 129.10 of the Tax Code of the Russian Federation in the amount of 1,000,000 rubles is provided.

For questions about the preparation and provision of documentation of the international groups of companies, please contact Acsour experts.