News from your personal tax advisor

Transcription

1 News from your personal tax advisor Issue #5 International Assignments Services (IAS) PwC Russia 5 edition, April consulting services/individual taxplanning/publications.html

2 It s time to file As you may know, the deadline for filing personal income tax returns for 2015 is 30 April However, since 30 April falls on a weekend, the deadline is extended to 4 May 2016, which gives the taxpayers extra several days to prepare and submit their tax returns. Still, we do not advise putting away your returns filing for later. On our side, we would like to remind in which cases individuals should submit their income tax returns. Russian tax residents and non-tax residents could be obliged to file personal income tax returns if they are in receipt of the following types of income: income received under employment or civil law contracts from which the Russian withholding tax was not withheld at source in full. For example, a tax return may need to be file if individual s tax status changed from a tax resident to non-tax resident in the course of the year that attracts 30% tax rate instead of 13%; interest income on investments/deposits in banks located outside of Russia; income from borrowings from Russian or foreign companies or individual entrepreneurs at a rate below 9% for foreign currency loans or below 2/3 refinancing/key rate for loan denominated in roubles; income from sale of real estate and other assets (including sale of securities), vehicles, garages, parking spots both in Russia and abroad; income or losses from securities and derivatives transactions generated/incurred in roubles or foreign currency (in the latter case the financial result is calculated by converting foreign currency income and losses into roubles); income from sale of property and/or property rights; income from participation in long-term incentive plans; dividend income from Russian or foreign companies; rental income; income from liquidation of foreign companies/trusts; income from winnings; income in-kind (i.e. partial or full payment for goods or services made for the taxpayer); other income including gifts; income from assignment of claims, contributions of employers (other companies) to corporate pension funds or insurance plans etc. In addition to obligation of filing a tax return due to receipt of income, the tax payer have a right to file a tax return to claim property, social and investment tax deductions related to the following expenses: acquisition of property; payment for education and/or medical treatment for themselves or their family members; contributions under Russian private pension insurance or voluntary life insurance contracts; transactions on an Individual Investment Account (IIA); charity related expenses.

3 Cash flow statements: the new date in a tax calendar Starting 2015, individuals who are considered as residents for Russian currency control purposes must file an additional report with the tax authorities: a cash flow statement for their foreign accounts. The first statement (for the year 2015) must be submitted to the tax authorities on or before 1 June The statement form must contain information on starting and ending account balances and aggregated information on amounts debited and credited on the account. Automated exchange of information among tax authorities: coming changes The global exchange of tax information is carried out in two key directions: as part of FATCA (US tax legislation requiring financial institutions all over the world to identify US citizens-taxpayers) and OECD (Organisation for Economic Cooperation and Development), which adopted the Common Reporting Standards, which are designed to counter tax evasion. Countries that signed the Information exchange agreement have historically provided certain tax information on specific requests of corresponding authorities. OECD standards abrogate one-time requests and introduce automatic annual exchange of tax information accumulated by the tax authorities. Data exchange will be carried out with respect to information on investment income, account balances, income from sale of financial assets etc. The key criteria for the exchange is tax residency. The Common Reporting Standards have been signed by over 80 countries. The first automatic exchange is scheduled to occur in September 2017 and will include information regarding the year will also be the year when these countries will introduce key CRS principles in their national legislation. Thus, many of our clients have reported that western financial institutions already gather additional information in order to comply with CRS. Will foreign banks provide information about accounts of Russian citizens directly to the Russian tax authorities? Will the Russian tax authorities have direct on-line access to the information Russian clients gathered by foreign banks? How soon will the CRS standard be implemented in Russia? A separate issue is how CRS will apply to structures without legal entity status (trusts) and those using such structures, and also how CRS requirements correlate with requirements of the Russian tax legislation on controlled foreign companies (CFC rules)? On 6 April a free seminar will be held in our office concerning these topics. If you would like to participate, please follow the link below to learn more and to register for this event: seminar

4 Capital amnesty: clarifications and amendments On 25 March the bill has passed the second and third readings, which amends the Federal Law On declaration by individuals of their assets and bank accounts (deposits) The bill extends the time lines for legalising property and capitals to 30 June 2016 (the end date of the declaration campaign). Please see our bulletin on capital amnesty for more details about this legislative initiative (which is attached to this communication). Currency regulation: the limitations period related administrative liability is extended The limitations period on administrative violations of currency legislation is extended from 12 months to 2 years (the bill was adopted in the third reading on 25 March 2016). The individuals who are considered as residents for currency regulation and control purposes should approach the transactions conducted using foreign accounts more carefully. Currency control residents are mainly Russian nationals and foreign nationals with a residence permit. Please see our legal bulletin, which we will publish shortly, for more retails on this topic.

5 Your personal tax advisor To further discuss in detail how the above legislative initiative may affect you and your business, please contact your personal tax consultant. We would be happy to assist you in determining your tax liabilities and preparing the reports. Ekaterina Lazorina Partner, Russian Tax and Services Leader Tel.: +7 (495) Karina Khudenko Partner Tel.: +7 (495) Evgeny Sivoushkov Director Tel.: +7 (495) Natalia Parkhomovich Tel.: +7 (495) Gregory Kharitonov Tel.: +7 (495) Elizaveta Mikhalkina Tel.: +7 (495) Dmitry Aborin Tel.: +7 (495) Ilona Shataeva Tel.: +7 (495) Ekaterina Shvedova Тел.: +7 (495) Yulia Titova Tel.: +7 (495) Nata Zhuravleva Assistant to IAS Group Tel.: +7(495) Irina Korotkova Personal Assistant to Karina Khudenko Tel.: +7(495) PricewaterhouseCoopers Russia B.V. All rights reserved.