The Ministry of Finance and the Ministry of Foreign Affairs (MFA) have proposed to President Vladimir Putin that he consider suspending provisions in regulations to avoid double taxation between Russia and unfriendly countries. The corresponding proposal was published on the website of the Russian Ministry of Finance.
The reason for the proposal of the departments was the exclusion of Russia from the list of "pure tax jurisdictions" and the addition to the so-called "EU black list". According to European representatives, after the start of a full-scale invasion of Ukraine, Russia stopped the full exchange of tax information and does not respond to all European requests. Exactly this was the reason for the decision to put Russia on the list of non-cooperative jurisdictions.
“The introduction of restrictive measures unilaterally is a violation of international law. Accordingly, Russia has grounds for introducing retaliatory measures,” the ministry said in a statement.
The duration of the decree, which is being lobbied by the Ministry of Foreign Affairs and the Ministry of Finance, is proposed by the departments to be attributed to the end of the sanctions imposed by the so-called "unfriendly countries". The effect of preferential tax regimes for citizens and legal entities will be suspended from the moment the decree is signed by Russian President Vladimir Putin, the report says.
The suspension of double tax treaties will primarily affect Russians who have left Russia but continue to work for Russian companies. The law will also affect citizens who continue to trade in foreign securities, for example, American ones on the stock exchange. Now they will have to pay twice: once in Russia, at domestic rates, and the second time in the US, according to local rules. International companies that are registered in foreign jurisdictions but continue to operate in Russia will face similar problems: if they are registered in an “unfriendly country”, they will have to pay tax twice.
Currently, Russia has more than 80 double taxation treaties. Among the "unfriendly countries" it includes: all members of the European Union, the United States, Australia, Great Britain, Iceland, Canada, South Korea, Singapore, New Zealand, Norway, Ukraine, Montenegro, Switzerland, and Japan.