Notification of Membership of a Multinational Enterprise Group for 2019

LEGAL DIGEST, NEWS \ 20.08.2020

Please be reminded that Russian companies that belong to a multinational enterprise (MNE) group must submit notifications to the tax authority of their membership of the MNE group.

An MNE group is recognized as an association of companies and/or foreign unincorporated structures for which the following conditions are met simultaneously:

• The companies/foreign structures are interconnected through their participation in capital and/or exercise of control;
• Consolidated financial statements are drawn up for the MNE group as required by Russian legislation or by stock exchanges, including foreign ones;
• An MNE group comprises:

– at least one company which is either a Russian resident or a Russian non-resident that is taxed in Russia through a permanent establishment;

– at least one company which is either a Russian non-resident or a Russian resident that is taxed in a foreign state through a permanent establishment.

In what cases is a company required to submit the notification?

A company is required to submit the relevant notification if the group’s consolidated revenues for the financial year preceding the reporting year exceeded:

• RUB 50 billion, if the parent company is a Russian resident;
• the amount of income established by the foreign state of which the group’s parent company is a resident.

The notification is filed strictly in electronic form. The filing deadline is not later than 8 months from the end of the reporting period for the parent company.

If the financial year of the parent company coincides with the calendar year, the filing deadline for 2019 will be 31 August 2020.

In addition to the notification, the financial statements of the MNE group also include country-related information, such as global and national documentation and a country report.

Please note that if the parent company of the MNE group is not a Russian resident, it will submit country-related information to the regulatory bodies of its home state in accordance with local rules. In Russia, such information should be submitted only if requested by tax authorities.

Liability for non-compliance with the requirements

If the deadlines are not met for submitting the documentation relating to the MNE group and if the tax authority identifies any errors or inaccuracies in the documents, the following administrative liability has been established:

• for a failure to file the notification of membership of the MNE group – a fine of RUB 50,000. A member is released from liability if it independently identifies errors and inaccuracies and files an adjusted notification before it learns that the tax authority has identified such errors.
• for the failure to file the country report, global documentation and national documentation – a fine of RUB 100,000 for each document.

The members of an MNE group will not be held liable for violations identified for the reporting periods of 2017 to 2019.

For any matters regarding how the financial statements of an MNE group should be drawn up and filed with tax authorities, please contact Acsour’s specialists.