Starting July 1, 2024, new rules come into force (Federal Law of 25th December 2023 No. 647-FZ), obliging Russian participants of international group of companies (IGC):
- to notify within 30 days the tax authorities of the opening, closing of accounts, change in account details of all non-resident IGC participants in foreign banks;
- to provide reports on movement of monetary funds and other financial assets on the accounts of all non-resident IGC participants in foreign banks for every half year starting from the second half of 2024. The deadline for submission of the first report is until January 30, 2025.
Generally, an IGC is defined as a group of organizations and (or) foreign non-corporate structures that are related to each other through participation in the capital and (or) exercise of control. The exact definition is given in Article 105.16-1 of the Tax Code. At the same time, there is currently no clarification whether the obligation is imposed on all IGCs or only on those IGCs where three-tier documentation is issued for transfer pricing purposes.
Notably there are some exceptions to the obligation to provide reports. Reports, in particular, are not provided:
- with respect to IGC which has more than 50% of its assets outside the Russian Federation;
- by residents-IGC participants
- not directly or indirectly participating in, or controlling a non-resident; and/or
- in which there is no direct or indirect participation of a non-resident, which are not under the control of a non-resident.
There are no exceptions to the notification obligations, however, there is an intention to introduce them by the Resolution of the Government in the near future.
Due to not entirely precise legislative wording, many questions have already arisen: e.g., how to count 50% of assets, on the basis of what reporting; whether exceptions apply if residents belonging to the IGC do not have subsidiaries abroad, or whether it is also necessary that there is no foreign (direct or indirect) participation in their capital. In addition, it is not quite clear whether notifications must be filed for accounts opened before July 1, 2024. These new obligations also leave a number of other issues open, which we hope will be clarified in the very near future.
Fines for non-compliance with the above obligations may be up to 1 million rubles for failure to provide a notification and up to 150 thousand rubles for failure to provide a report.