Russia issues draft law on country-by- country …

1 On 8 April 2016, the Russian Finance Ministry issued a draft law on the introduction of country -by- country reporting in Russia ( draft Law).1 The draft Law has been developed as part of the implementation of base erosion and profit shifting (BEPS) international tax initiatives in Russia and is largely consistent with the recommendations set forth by the Organisation for Economic Co-operation and Development (OECD). country -by- country (CbC) reporting is envisaged in the Report on Action 13 of the BEPS Action Plan (the Report), issued in October 2015, and proposes a three-tiered tax reporting system for international groups (CbC reporting , master file and local file).According to the draft Law, Russian taxpayers would have to annually submit notifications of participation in international that are parent companies or surrogate parent companies of international groups would be required to prepare and submit CbC some situations (in general, where there is no effective possibility to receive CbC report from the parent entity jurisdiction or such report has not been filed), this obligation would also be imposed on other Russian taxpayers that are constituent entities (participants) of international groups (secondary filing obligation).

2 Under the draft Law, secondary filing obligation arises for each Russian constituent entity. The range of constituent entities appears to include separate subdivisions ( , representative offices) that do not have a permanent establishment April 2016 Global Tax AlertNews from Transfer PricingRussia issues draft law on country -by- country reporting requirements for public consultationEY Global Tax Alert LibraryAccess both online and pdf versions of all EY Global Tax into your web Tax Alert Transfer PricingCbC reports would include key financial and tax indicators of international groups (such as revenue, profit, taxes payable, number of employees, amount of capital and intangible assets) for each jurisdiction in which an international group operates, along with identification details and information on the main activities of all participants in the group. So far no interpretation has been given to the exact meaning of indicators included in CbC groups are understood to mean groups with an international presence (including through international permanent establishments and (or) subsidiaries) that is generally in line with the proposed OECD approach.

3 The CbC reporting requirements would apply only to international groups whose aggregate revenue according to consolidated financial statements for the financial year immediately preceding the financial year for which a CbC report is submitted exceeds 50 billion to the draft Law, CbC reporting requirements would apply to financial years commencing from 1 January 2017. Reports would have to be prepared within 12 months of the end of the financial year for which consolidated financial statements are prepared. The draft Law also provides for CbC reports to be submitted on a voluntary basis for financial years prior to draft Law prescribes moderate fines of 50,000 and 100,000 rubles for failure to submit notifications and CbC reports and for the submission of inaccurate information. For violations identified in 2017 to 2019 there would be a grace period during which fines would not be introduction of CbC reporting requirements should enable Russian groups with an international presence to submit CbC reports in Russia , , in the parent company jurisdiction.

4 The subsequent provision of reports to other jurisdictions in which international groups operate would be the responsibility of the Federal Tax Service through the newly introduced system of automatic information exchange. At this stage the draft Law does not contain requirements to prepare and submit a Master file setting out the business, financial and organizational framework of the activities as well as the transfer pricing policies of international groups (to supplement the numerical information contained in the CbC report).Endnote1. #npa= Tax Alert Transfer Pricing3 For additional information with respect to this Alert, please contact the following: Ernst & Young (CIS) , Cross Border Tax Advisory, Moscow Vladimir Zheltonogov +7 495 705 9737 Marina Belyakova +7 495 755 9948 & Young (CIS) , Transfer Pricing and Operating Model Effectiveness, Moscow Evgenia Veter +7 495 660 4880 Steve Cawdron +7 495 287 6536 Maxim Maximov +7 495 662 9317 & Young LLP, Russian Tax Desk, New York Julia Samoletova +1 212 773 8088 | Assurance | Tax | Transactions | AdvisoryAbout EYEY is a global leader in assurance, tax, transaction and advisory services.

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