Case Study от компании PricewaterhouseCoopers:
решения призеров
Tasks:
1. A foreign legal entity intends to purchase a Russian oil-producing business and asks you what taxes Russian oil-producing companies are subject to?
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Belyakova Marina
31 October 2003
Mr. _____________
Financial Director
“X” Co
Dear Mr. _________,
Permanent establishment concept and its implication for a construction site in the russian federation
Further to our agreement, please find below our advise on:
- the concept of a permanent establishment (PE) and its implications under the Russian rules; the tax status of construction activities carried out by a foreign legal entity on the territory of the Russian Federation (hereinafter, RF).
Facts and Assumptions
We understand that:
· “X” Co. (hereinafter, ItCo) is a resident company of Italy engaged in construction activities.
· ItCo is planning to undertake a construction project in Moscow for 10 months.
Analisis
1. Permanent Establishment issue
The detailed definition of a PE is provided in Chapter 25 of the Russian Tax Code and in general is in line with the European legislation on the issue. Thus, PE risk may arise when a foreign company carries out commercial activities in Russia through a permanent place of business (representation, subdivision, bureau, office, agency) on a regular basis. In other words, to trigger PE risk, the foreign legal entity should have someone located permanently in the Russian territory and involved in the supply of goods (work or services) on behalf of this foreign company.
If the activity of a foreign legal entity is considered to result in a PE in Russia, income generated by this activity can be subject to Russian profits taxation. Thus, it is beneficial for tax purposes that the RO activities are restricted to those, which will not create a taxable presence in Russia.
Both domestic and international legislation provide exemptions from the general rule, i. e., cases when certain activities of the foreign legal entity will not lead to a PE even if they are regularly performed in Russia. Under Russian law, as amplified by the Russian-Italian DTT (Rome, 9 April 1996), such activities are those of a “preparatory and auxiliary” nature in relation to the activities of the company of which the RO is a part.
Below we have listed the summary of the constraints on the activities of employees working in the Representative office in the RF.
The following activities can be safely performed by employees of the representative office without a significant risk of creating a permanent establishment:
· Presentation of products and price lists (both prepared in advance by ItCo);
· Seek and introduce new customers to ItCo;
· Purchase of local supplies etc. for the maintenance of the RO;
· Gathering or distribution of marketing information;
· Market research;
· General representation activities.
· Merchandising. Merchandising activities (placement of stands, leaflets, posters etc. at the places of retail sale of goods of the Head office) does not itself constitute a taxable status for the RO. However, you should be very careful about assisting the Russian distributors in selling goods to the retail stores, since it can be treated as provision of services to third parties and lead to a taxable status.
The following activities may be performed by the representative office subject to limitations and compliance with certain formalities in order to minimize the risk of creating a permanent establishment:
· Negotiating non-material terms of contracts (negotiation of material terms of contracts in a way that is binding will create the risk of a permanent establishment). Although it is not clarified in the tax legislation, what are material terms, we believe that substantial terms are normally expected to include prices, volumes, discounts, delivery terms and periods. What the office personnel could do is pass information to the customers on standard terms. Any significant changes to these would need to be communicated offshore, where the final decision is to be made.
· Process orders and manage transfer orders (taking orders on behalf of ItCo in a way that is binding to ItCo will create a permanent establishment);
· Sign contracts on behalf of ItCo based on precise instructions from the head office. We believe that the authorized RO employees can sign the contracts if they receive an instruction from the head office of approximately the following substance: “Please sign the attached Contract №__ with the Customer which was approved between ItCo and the Customer”.
2. TAX ISSUES ARISING FROM CONSTRUCTION ACTIVITIES OF A FOREIGN LEGAL ENTITY ON THE TERRITORY OF RF
According to the Russian-Italian DTT, construction activities if carried for less than 12 months do not lead to PE creation. Thus, taking into consideration that the project in question is to last only 10 months, ItCo is not likely to face the risk of PE. However, some clauses of Chapter 308 of the Russian Tax Code are to be discussed should the company wish to continue its activities on the territory of RF.
| Scope of works According to Chapter 25, a construction site of a foreign organization on the territory of the Russian Federation shall mean not only a place of construction but also reconstruction, extension, retooling and/or repair of existing objects of immovable property. Moreover, when determining the period of existence of a construction site for the purposes of calculation of profits tax works connected with creation of approach tracks, lines of communication, electricity cables, drainage and other infrastructure items, except for objects of infrastructure which are originally created for other purposes not connected with this construction site are to be included. Therefore, the extended number of activities which lead to construction site establishment, might result in a longer period for the project which gives rise to a PE risk. |
C. Period§ A construction site shall be deemed to exist for tax purposes from the earlier of the following dates: the date of signing of the act on transfer of the site to the contractor. § A construction site shall be considered as having ceased to exist on the date of signing by the customer (developer) of the acceptance act for the object or of the scope of work stipulated by the agreement. Where no acceptance act was formalized, or work has actually finished after the signing of such act, the construction site shall be considered as ceasing to exist (the subcontractor's work shall be considered completed) as of the date of the actual cessation of preparatory, construction or assembly works, included into the scope of work of the relevant entity on this construction site |
D. . Interruptions and re-commencementA construction site shall not cease to exist if works on it are temporarily suspended, except for the cases where a construction project is temporarily closed down for more than 90 days on the basis of decisions of federal executive bodies. Otherwise, continuation or re-commencement of work after interruption shall result in the adhesion of the period of continued or recommenced works and of the period of interruption to the aggregate period of existence of the construction site, but only in case: |
1) the territory (water area) of recommenced works is the same territory (water area) of the interrupted works or closely connected to it; |
2) the continued or recommenced works on the project are subcontracted to the person who previously performed works on this construction site, or if the new and previous contractors are related parties. |
Where the continuation or re-commencement of works is related to a construction or installation of a new project on the same construction site, or the extension of the previously completed project, the period during which such continued or recommenced works are carried out and the period of interruption shall also be added to the aggregate period of existence of the construction site. |
We hope that our advise will prove to be of help to you. Should you have any more questions, please, do not hesitate to contact me or_____________.
Yours sincererly,
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2. An accountant of the Moscow Branch of a German company that conducts commercial activity in Russia requested help in regards to deductibility of interest payable on a bank loan, which was granted to the company to finance its Russian operations in January 2003. The interest payable on the loan is 15% p. a. What amount of interest will be deductible for year 2003?
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Bezborodkina Sofia
As we may consider from the terms of the case, the German company is carrying on its business in Russia through the Moscow Branch, but we are unaware of the currency of the granted bank loan.
The Company, according to the article 265 of the Tax Code can classify the interest payable on a bank loan as non-sale expenses. But the amount of interest charged on the loan is deemed an expense if the interest does not significantly deviate from the average level of interest charged on debt obligations issued in the same quarter under comparable conditions (same periods, same currency, comparable amounts, similar coverage). But we have no information about such obligations. In these conditions the maximum amount of interest which may be recognized as an expense shall be taken as equal to the refinancing rate of the Central Bank of the Russian Federation increased by the factor of 1,1 in the case of a loan arranged in rubles and shall be taken as equal to 15 % if a loan is in foreign currency.
The refinancing rate in January 2003 was 21 per cent, the normative (maximum) amount of interest payable is 23,1 per cent. So if the loan was granted in rubles, the whole amount of interest payable on the bank loan would be deductible. It is the same if the loan was granted in foreign currency, as the interest on the loan is equal to the normative interest (15 %).
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Belyakova Marina
31 October 2003
Mr. _____________
Project Director
“X” Co
Dear Mr. _________,
tax issues arising from carrying out oil production activities on the territory of Russian FEDERATION
Facts and Assumptions
We understand that a Foreign legal entity intends to purchase a Russian oil-producing business and asks what taxes Russian oil-producing companies are subject to
Summary
On January 1, 2002, a new tax system took effect in Russia for producers of mineral resources.
At its current stage, the tax reform does not encourage producers to increase the efficiency of production of all categories of reserves. It rather prompts them to partially extract them at easily accessible fields. Only oil companies seeking to maximise their current financial flows and exports while minimising investment activities are likely to benefit from it.
The key elements of the reform are as follows:
- The profits tax rate has been reduced; A new tax on mineral resources production was introduced to replace several taxes subsoil users used to pay; The introduction of the new mechanism of the tax on extra revenue is under the way;
Work on a special chapter of the Tax Code devoted to taxation under PSAs continues.
Analisis
I. The profits tax
The new procedure for the profits tax is established by Chapter 25 of Russia’s Tax Code. The main innovation is the reduction of the profits tax rate from 35 to 24 per cent, while all its tax breaks have been withdrawn, including investment allowances (companies were allowed to reduce the tax base for the profits tax by up to 50 per cent, if the money was used for investment).
The shares of the profits tax going to the federal and local budgets have been reviewed.
Until now, 11 per cent of the 35 per cent went to the federal budget, 5 per cent to the local budget and 19 per cent to the regional budget (and the region could offer a tax rebate within its share by up to five percentage points). The 24 per cent profits tax will now be divided differently — 7.5 per cent to the federal budget, two per cent to the local budget and 14.5 per cent to the regional budget, with the latter allowed to grant a tax break up to four percentage points, which may bring the actual profits tax rate down to 20 per cent.
In our opinion, the potential consequences of this innovation for investors in oil and gas projects are likely to be as follows.
Profits tax breaks, primarily investment allowances, have been broadly applied in Russia. According to the State Duma’s budget committee, the actual profits tax rate (with account of all tax breaks) was 19.5 per cent for Russia on average in 2000.
The withdrawal of investment allowances, given the new profits tax rate of 24 per cent, will keep actual rates virtually unchanged as regional tax breaks have been retained. Therefore, if regions grant tax rebates, the actual profits tax rate will be almost the same — 19.5 per cent compared with the previous rate of 20 per cent.
On the other hand, several points should be mentioned:
To a company having long-term production plans, maximising its oil-related priorities, and implementing its investment programme to expand its production capacities etc, the tax reform means an effective growth in the tax burden.
But vertically integrated oil companies maximising their current financial flows, continuing to ‘eat away’ available reserves on their balance sheets will see their tax burden eased due to the reform.
The reduction of the nominal profits tax rate cannot encourage foreign investors either, if their home countries are parties to agreements with Russia on avoiding double taxation. The amounts by which their profits tax is reduced in Russia will be charged by tax agencies in their home country. In this respect, the law may be regarded partially as a measure strengthening Russian companies’ ability to compete with foreigners in the Russian market, even as the tax burden on oil producers grows. But it certainly cannot improve the Russian oil industry’s competitive edge in the international market.
II. Tax on production
The tax on mineral resources production replaces royalties, payments for the restoration of the mineral resources base and excises (except excises for natural gas). The new tax and its levy procedure are outlined in the Tax Code’s Chapter 26. According to Russia’s Ministry of Finance, the tax on production is introduced as a mechanism that would ensure a tax burden equivalent to the taxes it replaces. This way the Ministry of Finance fixed the basic tax rate at 16.5 per cent of gross revenue — 8, 6 and 2.5 per cent are the actual rates for royalties, mineral resources payments and excises (based on the weighted average prices of oil supplied to the domestic market and exported).
True, the rate of 16.5 per cent will only be applied in the future, starting in 2005. For PSA projects, half the rate will be used (it has not been specified, whether or not the reduced rate will be effective between 2002 and 2004). For projects implemented under the general licence system with companies financing geological exploration with their own funds, the tax rate will be 30 per cent lower than the basic rate of the tax on production. Between 2002 and 2004, a special rate of the tax on production will be levied, equal to 340 roubles per tonne, adjusted to the rouble’s hard currency rate (against the dollar) and changes in world prices of Russia’s Urals export blend. At this initial stage, the tax on production will serve as a means of combating transfer prices. For that reason, a specific rate is fixed, rather than an ad valorem rate.
For projects implemented in the general licence system’s framework, the introduction of the production tax means a
higher tax burden when oil prices are higher than $12 a barrel or 2,600 roubles a tonne.
The market price of oil in the domestic market (for trade between independent parties) already exceeds the level.
III. Extra revenue tax
Work of the draft law on the extra revenue tax — it will let the state withdraw part of differentiated rent or super profits gained by mineral producers due to their work in better natural conditions — continues. Under the general subsoil use licensing system, this tax regime will be governed by administrative law, with all three taxes unilaterally fixed by the state. Under PSAs based on contract law, the tax on extra revenue will be replaced by production sharing established through negotiations.
IV. Customs tariffs
On January 1, new rates also took effect for oil export tariffs. The most important innovation here is that tariff rate caps are at long last fixed by the law. This law fixes the mechanism for defining customs tariffs which corresponded to the ratio of prices to tariffs at the moment the law was adopted and dependencies between prices levels and tariff rates.
Article 4 of the Federal Law, No 126, dated August 8, 2001, made amendments to the Russian Federation Law on Customs Tariffs, No 5003-1, dated May 21, 1993. Rate margins have been fixed for oil export tariffs:
— 0 per cent — when average prices for the Urals blend in the world markets (Mediterranean and Rotterdam) over the preceding two months were up to $109.5 a tonne (around $15 a barrel);
— up to 35 per cent of average prices for the Urals blend in the world markets overthe preceding two months less $109.5 a tonne — when average prices over the preceding two months were between $109.5 a tonne and $182.5 a tonne (around $25 a barrel);
— up to $25.53 a tonne and 40 per cent of average prices for the Urals blend in the world markets over the preceding two months less $109.5 a tonne — when average prices over the preceding two months were higher than $182.5 a tonne.
We hope that our advise will prove to be of help to you. Should you have any more questions, please, do not hesitate to contact me or_____________.
Yours sincererly
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Smirnov Ilia
First, we should take into consideration that according to RF tax code (part 1, asset 7) in case of any contradiction between RF tax code and any international agreement of the Russian Federation on taxes the agreement will be preferable. There is such an agreement between the Russian Federation and the Federal Republic of Germany dated 29.05.1996, so we should use provisions of this document.
Secondly, according both to the agreement (asset 5) and RF tax code (asset 306, paragraph 2) the above-mentioned Branch is a permanent representation of this German company. Now we are going to analyse both documents’ (RF tax code and the agreement) provisions and to show that according to these documents we can deduct the whole sum of taxes.
According to the agreement (asset 7, paragraph 3) we can decrease the Branch’s income with the whole sum of expenditures spent for the aims of the permanent establishment, no matter where (at what territory) these expenditures took place. This clause is more common, than the clause of RF tax code.
The common rule in RF tax code (part 2, asset 269, paragraph 1) reads that it is possible to declare interest payable on a bank as an expense if an interest rate is less or equal to 15% (if a credit is granted in foreign currency) or less than 1.1*Central Bank refinancing rate (if a credit is granted in rubles). According to RF tax code, asset 247, subparagraph 2, we may reduce earned income with the sum of expenditures required to earn the income. So according to RF tax code the Branch may also deduct the whole sum of interest.
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3. An Italian construction company is planning to undertake a construction project in Moscow for 10 months. The person is charge of the project is a business person and is not much aware of tax issues. He calls you up and asks to clarify what the concept of a permanent establishment (PE) implies under the Russian rules and whether the proposed activities would create a PE of the Italian company in Russia.
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Bezborodkina Sofia
The concept of permanent establishment is used in Russian legislation to determine a tax status of a foreign legal entity (i. e. for taxation purposes only). PE means a fixed place of business through which the business of a foreign legal entity is wholly or partly carried on.
According to the Civil Code a foreign legal entity’s autonomous subdivision may exist in the form of a branch or a representative office. The Civil Code also ascertains distinctions between these forms.
The term PE is determined in the article 306 of the Tax Code for purposes of corporate profits taxation. It is a branch, a representative office, a bureau, an agency or any other regular place of business in the territory of the Russian Federation and also it is an activity of some subjects (called dependent agents). Thus, it is not obligatory that PE acts as a branch or representative office. But if such activity constitutes a PE, it entails the liability of foreign legal entity to a pay corporate profit tax in the Russian Federation.
Signs of PE are ascertained by the tax legislation. They are: presence of an autonomous subdivision or any other place of commercial activity of a foreign legal entity in Russia; business activity in the territory of Russia; carrying business on a regular basis (notion of regular basis is given in the Tax Code and by-laws).
The term PE is also disclosed in the bilateral agreements on some taxation issues (avoidance of double taxation, etc.) with foreign states. In case a foreign legal entity is a resident of a state which has such agreement with Russia, presence or absence of PE is determined in accordance with the agreement. According to the article 5 of the Convention between the government of the Russian Federation and the government of the Italian Republic for the avoidance of double taxation with respect to taxes on income and on capital, signed on 9th of April 1996, a building site or construction, assembly or installation project or supervisory activities connected with constructions mentioned above therewith constitute a PE if only such building site, project or activities last for a period of more than twelve months.
In this case the term of the planned construction project makes ten month, hence the proposed activities of the Italian legal entity won’t constitute a permanent establishment.
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Belyakova Marina
31 October 2003
Mr. _____________
Chief accountant
“X” Co
Dear Mr. _________,
DEDUCTABILITY OF INTEREST PAYABLE
Facts and Assumptions
We understand that a Moscow Branch of a German company that conducts commercial activity in Russia requested help in regards to deductibility of interest payable on a bank loan, which was granted to the company to finance its Russian operations in January 2003. The interest payable on the loan is 15% p. a. We are to determine the amount of interest which will be deductible for year 2003.
Analisis
According to Chapter 269 of the Russian Tax Code, interest charged in respect of any kind of debt obligation shall be recognized as expense provided the amount of interest charged by the taxpayer in respect of the debt obligation does not materially deviate (an upward or a downward deviation by more than 20 per cent from the average level of interest charged in respect of a debt obligation issued in the same quarter under comparable conditions) from the average level of interest charged on bank loans (other loans) that were made available in the same reporting period under comparable conditions.
Where no bank loans were made available in the same quarter under comparable conditions, the maximum amount of interest recognized as expense shall be deemed equal to the refinancing rate of the Central Bank of the Russian Federation multiplied by 1.1 for debt obligations denominated in rubles, and 15 per cent for bank loans denominated in foreign currency.
Both options provide for the full deductibility of interest payable amounting to 15%.
We hope that our advise will prove to be of help to you. Should you have any more questions, please, do not hesitate to contact me or_____________.
Yours sincererly
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Smirnov Ilia
Here we face practically the same situation, when in case of any contradictions between RF code and any international agreement of the Russian Federation on taxes the agreement has priority (tax code, part 1, asset 7). There is an agreement (convention) between the Russian Federation and the Italian Republic dated 09.04.1996, so we should deal with the provisions of this document.
According to the convention (asset 5, paragraph 3, subparagraph “g”) a building yard which exists more than 12 months becomes a permanent establishment (PE) of a company. If less than 12 months - no PE appears. The Firm undertakes a construction project for 10 months so no permanent establishment will be done in the Russian Federation. (On the other side RF tax code runs that such an activity will set up a PE in any case what may result in problems with our tax officials).
Let’s clarify some questions concerning a PE. A PE exists since the moment a deed of conveyance of a yard to a contractor (the Firm) is signed or a firm virtually starts working. A building yard (virtually a PE) stops its existing when an acceptance report is signed. At the same time a building yard wouldn’t stop its existing if the firm suspends its building activity for the time being. So the whole period of building should be less than 12 months, otherwise the Firm would establish a PE in Russia.
What does it mean? If a firm sets up a PE income tax should be paid. If a firm doesn’t set up a PE income tax should be deducted from the firm’s income by the source of revenue but some of the revenues are not taxed at all. According to the convention between the Russian Federation and the Italian Republic (asset 7, paragraph 1) an Italian firm operating in Russia with no PE being established has to pay only Italian income tax.
To conclude all above-mentioned we may say, should the Firm undertake a construction project for 10 months, the income from the project would be taxed according to the Italian tax code. However to give a more detailed answer we should know how the Firm is going to operate in Russia. Whether it will be a general contractor or not? Whether the firm plans to stay in Russia longer than 10 months or not?
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Trofimov Igor
One of the main issues of foreign company’s taxation is permanent establishment concept. The concept of permanent establishment allows countries in which this permanent establishment is settled to tax all company’s incomes concerned with this establishment. The Russian Tax Code and OECD model convention contain only general definitions of permanent establishment. And if an international agreement disputes with the Tax Code than judicial procedures of the international agreement must be applied.
As far as Italian company’s case is concerned, the convention between the Russian Federation and the Italian Republic for the avoidance of double taxation must be applied. According to this convention, a construction place becomes a permanent establishment in case if the construction process lasts more than 12 months. The Russian Tax Code part 2, chapter 25 Corporate Income Tax article 308 determines the starting date of construction as the earliest of the following dates:
· The date of signing a statement of assignation of a construction place to a contractor;
· The actual starting date of the construction.
The ending date of the construction (in compliance with the Tax Code) is the date of signing acceptance-transfer report.
Summarizing all above-stated we can conclude that if this construction process (in compliance with The Tax Code) lasts 10 months no permanent establishment of the Italian company will be created.
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4. A USA drilling company has signed a contract with a Russian client for provision of drilling services on the Russian territory. The manager in charge of the project asked you to clarify to him the concept of Russian VAT.
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Trofimov Igor
According to the Russian Tax Code, part 2 chapter 21 The Value Added Tax, the subject of the VAT taxation is selling of goods and services on the Russian Federation territory. Article 148 item 1 determines the conditions under which the place of selling is considered the RF territory. In our case the USA drilling company provides it’s Russian client with services which are directly associated with an immovable property (drilling site). It means that these services are the subject of taxation. Under the Russian Tax Code tax base is determined as the amount of revenue from sell. The tax rate for drilling services (article 164, item 3 of the Tax Code) is 20% till the end of 2003 and 18% from 01.01.2004. The way how taxpayer (foreign organization) pays VAT depends on if it is registered in a tax inspection or not:
· If the USA company is registered in a tax inspection for the tax purposes, it must pay the VAT on it's own and it also can take a tax deduction in the amount of VAT (incoming VAT):
a) Paid to suppliers for goods and services;
b) Paid on the custom when import operations were performed.
This deduction can be applied only if these goods and services have been acquired for the production purposes.
· If the USA company isn’t registered in a tax inspection for the tax purposes, its Russian client must withhold VAT each time it pays to the USA Company. For example if the client pays 120$ to the USA company it must withhold 20 $ (if a payment is made till the end of 2003), and 18,31$ (120$*18/118) if the payment is made after 01.01.2004. And no deduction right occurs until the USA company is registered in a tax inspection.
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5. Your friend would like to sell his apartment that was purchased in February 1999 for RUR for the amount of RUR 1 and would like to understand what personal income tax (if any) amount he would be liable for?
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Bezborodkina Sofia
In this case I would advise my friend to wait a little with the sale of his apartment, till February 2004.
He has right to get a property-related tax deduction according to the sub-clause 1 clause 1 article 220 of the Tax Code, but a property-related tax deduction will be granted in the whole amount received by the taxpayer upon the sale of his apartment, in case the apartment was owned by the taxpayer for five years or more. When selling the apartment before the five-years term expiry, the limit sum of property-related tax deductions amounts RUR 1 000 000.
As my friend’s apartment was purchased in February 1999 (then he could have been granted a property-related tax deduction in the amount RUR 600 000 according to the sub-clause 1 clause 2 article 220 of the Tax Code), it is owned for less than five years at the moment. It should be noticed, that the ownership on real estate is considered to be set up when the state registration is made. If my friend purchased his apartment and registered the right for it on 15th February 1999, he should sell it not earlier than on 16th February 2004.
If he sells his apartment now, he will be granted a property-related tax deduction in amount RUR 1 000 000, and liable for RUR 26 000 of personal income tax (RUR 200 000 * rate 13 %).
And if he sells his apartment in February 2004 or later, he will be granted a property-related tax deduction in the whole amount received (RUR 1 and won’t be liable for personal income tax on this sum.
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Smirnov Ilia
First, we should decide whether my friend is a tax resident in Russia or not (this means whether he lives in Russia more than 183 days a year (tax code, part 1, asset 11, paragraph 2)). If he isn’t a tax resident then according to RF tax code ( part 2, asset 224, paragraph 3) his income tax rate is 30%. In that case while calculating tax base he can’t use tax deductions (asset 210, paragraph 4) so he would have to pay 30% of the whole sum (RUR 1
If he is a tax resident, then he has the right to use the clause of the asset 220, paragraph 1, subparagraph 1. My friend owned the apartment less than five years so he can deduct his income either with the sum of RUR 1 or with the amount of actual expenditures (if he can prove them) – RUR The first variant is much more preferable so he would pay 13% of RUR
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Trofimov Igor
According to the Russian Tax Code, part 2, chapter 23 Personal Income tax, my friend will get 1 rub of taxable income, but if he owned that flat for a period less than 5 years (November 2003- February 1999) he’s able to get property tax deduction in amount of 1 rub. or greater if he proves it with documentation (the Russian Tax Code, part 2, chapter 23 Personal Income tax, article 220).
So He’s Tax base will be rub (income of 1 less deduction of 1
If my friend is a resident of the Russian Federation, he’s tax rate will be 13% and he’s tax liability will equalRub (13%*, but if my friend is non-resident of the RF, his tax rate is 30% and his liability isRub (*35%).
But if he waits till March 2004 he will be able get tax deduction in amount of 1 according to the Russian Tax Code, part 2, chapter 23 Personal Income tax, article 220) and no tax liability will occur in both cases (whether he is resident or not).
