New tax registration procedure for foreign entities.
Legal Update No. 205.
Goltsblat BLP advises that Order of the Ministry of Finance of the Russian Federation No. 117n dated 30 September 2010 will come into effect on 24 December 2010. It establishes Specific Principles for Tax Registration of Foreign Entities that are not investors under a production sharing agreement or agreement operators. In this connection, Provisions on Specific Principles for Tax Registration of Foreign Legal Entities approved by Order of the Ministry of Finance No. AP--3-06/124 dated 07 April 2000 will be invalidated.
The new Specific Principles are largely similar to the previous registration procedure for foreign entities.
We would like to emphasise the following key changes:
When several offices are located in the same municipal entities or major cities (Moscow or St. Petersburg) on territories within the jurisdiction of different tax authorities, the Order permits registration of an entity at the location of one of the offices of the foreign entity on the territory of the Russian Federation.
Foreign legal entities are to be registered with tax authorities at the location of their property and/or vehicles or, as a taxpayer of severance tax, on the basis of information provided by government authorities referred to in Article 85 of the Tax Code of the Russian Federation.
New provisions are introduced relating to the procedure for registration of foreign entities exporting goods from the Russian Federation obtained as a result of processing on the territory of the Russian Federation, as well as foreign entities doing business through a dependant agent on the territory of the Russian Federation.
A tax identification number is to be assigned to foreign entities during tax registration in connection with opening of an account with a bank on the territory of the Russian Federation. This novelty might result in a foreign entity with a Russian bank account being recognised as a taxpayer on the territory of the Russian Federation (for example, for VAT purposes).
The registration procedure for foreign entities on the basis of notices is excluded.
In the event of de-registration, a foreign entity may be subject to a field tax audit. It should be noted that a foreign entity may not be de-registered before such a field tax audit has been completed.
The Order introduces a simplified procedure for de-registration of a foreign entity, which may be carried out without involvement of the foreign entity if the foreign entity fails to file tax declarations (calculations) and (or) an annual performance statement within eighteen months of last doing so and if no operations are made on bank accounts of the foreign entity within this period.
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