Russia in BEPS and BEPS in Russia

Александра Коваль Александра Коваль Chief of Club Russia-OECD published Taxes
Russia in BEPS and BEPS in Russia

On April 17, 2019, the State Duma adopted the Federal law "On ratification of the multilateral Convention on the implementation of measures relating to tax agreements, in order to prevent the erosion of the tax base and the withdrawal of profits from taxation". Thus, Russia is taking a decisive step to ensure the implementation of the OECD BEPS Convention.

Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) is aimed at preventing the abuse of agreements for the avoidance of double taxation, in which profits are artificially moved to the States where it is not taxed or taxed at a reduced tax rate, which leads to significant losses of budgets in terms of tax on profit of organizations.

MLI was signed by the Ministry of Finance on behalf of the Russian Federation in accordance with the order of the Government of the Russian Federation of May 20, 2017 963 - p in Paris on June 7, 2017, during the meeting of the OECD Ministerial Council.

The Convention entered into force on 1 July 2018 after the OECD received 5 instruments of ratification. As of early April 2019, 87 States are parties to the Convention.

The list of treaties to which Russia intends to extend MLI is defined by the law. In particular, the law provides for the possibility of applying the provisions of the Convention to 71 existing intergovernmental agreements on avoidance of double taxation concluded by Russia, without a need for bilateral negotiations on each agreement (this list does not currently include, for example, the agreement with Switzerland). Furthermore, according to the article. 29 of the MLI, Russia has the possibility to expand the list of agreements at any time by sending a notification to the Secretary-General of the OECD.

The law on ratification of the Convention also contains a number of reservations and declarations. In particular, Russia reserves the right not to apply the provisions of MLI to agreements containing rules similar to those of the Convention, as well as rules relating to the application of the Convention to the agreements specified in the law.

Translation by Boryana Kiskinova