The State Duma has considered amendments to the Tax Code of the Russian Federation which are intended to improve the procedure for the taxation of international holding companies (IHC). The Act is to take effect upon publication, except for a number of provisions.
Among other things, it is planned:
The Act is to take effect upon publication, except for a number of provisions.
Document: Draft Federal Law N 330129-8.
Among other things, it is planned:
- to expand the opportunities of IHC in terms of choosing the form(s) of investments for application of reduced income tax rates. This will introduce a number of new forms of such investments. If the IHC has started applying the reduced rate of profit tax before the entry into force of the law, it submits an application for the commencement of the obligation under paragraph 4 of Article 284.10 of the Tax Code of the Russian Federation not later than December 29, 2023 (subparagraph “b” of paragraph 11 of Article 2, part 10 of Article 5 of the draft law);
- to formalize the procedure for preliminary approval of the form(s) of investment chosen by the IHC with a constituent entity of the Russian Federation (subparagraph “b” of paragraph 11 of Article 2 of the draft law);
- to introduce a flexible approach to assessing whether international companies that are IHCs fulfill their staffing and office space requirements during their first income tax period. The provision can be applied to taxation of income received (paid) from 2022 (subparagraph “a” of paragraph 11 of Article 2, part 9 of Article 5 of the draft law);
- to establish that international companies registered in 2023 may apply for IHC status within 12 months (subparagraph “a” of paragraph 2 of Article 1, part 3 of Article 5 of the draft law);
- to exempt from VAT the transfer of the results of work or property to a constituent entity of the Russian Federation or a municipal entity by the IHC under item 2 - 4 paragraph of Article 284.10 of the Tax Code of the Russian Federation (paragraph 1 Article 2 of the draft law);
- to enable the IHC to waive the 5% profit rate on income in the form of interest on debt obligations of any kind, if the conditions of Article 284.10 of the Tax Code of the Russian Federation are met. IHC – international companies, which are registered in the order of redomiciliation before the entry into force of the law, will be able to apply for a waiver within 3 months after the entry into force of the law (subparagraph “c” of paragraph 8 of Article 2, part 7 of Article 5 of the draft law);
- to exempt the controlling person of a foreign organization, in the order of redomiciliation of which an international company is registered, from the penalty for failure to submit a CFC notification. This will be possible if such foreign organization is terminated by its personal law. The rule will apply to notifications submitted for periods from 2022 (paragraph 4 Article 1, part 4 Article 5 of the draft law).
The Act is to take effect upon publication, except for a number of provisions.
Document: Draft Federal Law N 330129-8.