Presented in this alert is a brief overview of the additions made to the transfer pricing rules in the UAE based on the documents mentioned above.

On 19 May 2023, the US, the UK, Australia and Canada imposed new restrictive measures on Russia. The countries in question extended their sanctions lists mainly to include persons and entities connected with the defence and energy sectors.

In April 2023, in a new round of hearings on case No. A09/1751/2021 (Bershka CIS LLC), the trial court rejected the importer’s claims for the invalidation of the customs office’s decisions requiring the inclusion of royalties and dividends in customs value. Details of the grounds for the court’s decision are presented later in this alert.

On 16 May 2023, the State Duma passed in the first reading a bill (No. 337661-8) that allows international companies to be established through incorporation in the territory of special administrative districts and provides additional options for ICs in terms of the formation of management bodies and the structuring of equity capital (“the Bill”).

The start date for corporate tax in the United Arab Emirates (1 June 2023) is fast approaching. Federal Decree-Law No. 47 of 2022 on the taxation of corporations and business (“the Corporate Tax Law”) was signed on 3 October 2022, but many questions remain over how the law will apply in practice to various kinds of companies. Official questions and answers regarding the law were published immediately after the law itself was issued.

A draft order "On Approval of the Procedure for Sending a Request to Submit Documents (Information) and for Submitting Documents (Information) at the Request of a Tax Authority via Information Systems of an Organisation to Which the Tax Authority has been Granted Access" has been published. The Order will undergo public consultation until 5 June 2023.

This alert presents key findings from a survey of transfer pricing rules for financial transactions in countries classed as friendly to Russia, which multinational enterprises should take into consideration when making decisions about the pricing and conclusion of intra-group financial transactions in order to ensure compliance with local transfer pricing regulations.

On considering case No. A33−21 320/2021, the Economic Disputes Panel of the Supreme Court of the Russian Federation ruled that stating the wrong classification code for a part of goods when the total quantity of goods is correctly stated does not constitute a failure to declare goods.

On 12 April 2023 the Office of Foreign Assets Control (OFAC) extended the list of persons covered by the US’s blocking sanctions. The UK and the EU have likewise extended their sanctions lists. The key changes are listed below.

On 14 February 2023, the European Union Finance Ministers adopted a revised list of non-cooperative jurisdictions for tax purposes, adding four jurisdictions to the so-called "tax haven black" list (Annex 1): Russia, British Virgin Islands, Marshall Islands and Costa Rica and now the list includes 16 countries in total.

This alert contains a summary of the TP rules insofar as they apply to financial transactions and financial sector companies.

Over the last few decades many Russian companies have raised debt financing from foreign capital markets. This has been done by setting up special-purpose companies in accordance with the laws of foreign states. Issuers' activities were limited to organising the placement of debt securities among investors. The Issuers would then use the funds raised to issue loans to Russian entities. The Loan conditions would be similar to the conditions of issue of the Eurobonds.

On 1 January 2022 the new Tax Code of the Republic of Tajikistan entered into force, which includes transfer pricing (TP) requirements. Presented below is an overview of the key provisions of the TP rules, which are broadly in line with the main international principles laid down in the OECD Guidelines.

Section VI "Tax Control in Relation to Transfer Pricing" of the Tax Code of the Republic of Uzbekistan came into force on 1 January 2022. The TP rules define the term "Controlled Transactions" and regulate the processes of the preparation of TP documentation, the submission of a Notification of Controlled Transactions, the conclusion of advance pricing agreements, the conduct of TP audits, and so on. Presented below is an overview of the key provisions of the TP rules, which are broadly consistent with the main international TP principles.

The Federal Tax Service has been consistently extending the scope of the CRS rules (the OECD Standard for Automatic Exchange of Financial Account Information, Chapter 20.1 of the Russian Tax Code), including requirements relating to the electronic reporting format. By 31 May 2023 financial market organisations must provide processed data for the 2022 reporting period in accordance with the new reporting format (version 5.06) prescribed by the Federal Tax Service and the published XSD schema.

The cassation court in the second round of adjudication on case No. A70−785/2021 upheld an importer’s claims that a customs authority had acted wrongly in ordering royalties paid for know-how for the manufacture of a finished product to be included in the customs value of imported equipment used in building a process line for the manufacture of that product.

The Federal Tax Service has approved Order No. YeD-7−23/163@ of 13 March 2023 "On Approval of the Procedure for Access of Tax Authorities to an Organisation’s Information Systems". Under the new Order, the time limit previously set by Order No. YeD-7−23/1142@ of 23 December 2021 for tax monitoring participants to connect their information systems to the "Nalog-3" AIS is extended until 1 January 2024.

Decree No. 1 of Russia’s Chief Public Health Officer “On Clean-Up Vaccination against Measles in the Russian Federation,” dated 8 February 2023 (hereinafter, the Decree), will enter into legal force on 20 March 2023.

The USA, the EU, the UK and other foreign states have introduced new restrictive measures against Russia (sanctions).

Russia was included in the EU’s list of non-cooperative tax jurisdictions (the so-called ‘blacklist' - see Annex I).

In accordance with Law No. 7412 of 22 June 2022 on the Istanbul Financial Centre, companies registered in the Istanbul Financial Centre that sell goods purchased abroad in transit trade or intermediate in the purchase and sale of goods abroad have the right to reduce their corporate tax base by 50% (the standard corporate tax rate in Turkey in 2023 is 20%).

Changes to the rules governing the payment of VAT by tax agents came into effect from 1 January 2023.

The Federal Tax Service has published an updated List of Foreign States (Territories) with Whose Competent Authorities the Automatic Exchange of Country-by-Country Reports is Carried Out, approved by Order No. YeD-7−17/1226@ of 20 December 2022.

Law No. 2-FZ "On Mutual Ratification of the Agreement between the Government of the Russian Federation and the Government of the Republic of Belarus on Mutual Acknowledgment of Visas and Other Issues Related to the Entry of Foreign Citizens and Stateless Persons to Member Countries of the Agreement on Establishment of the Union State," dated 27 January 2023, entered into legal force on 1 February 2023.

On 29 December 2022, the President of Russia signed a number of laws aimed at striking a balance between attracting foreign investments into the Russian economy and averting possible risks associated with foreign investments in particular sectors.

On 9 November 2022, the Organisation for Economic Co-operation and Development (OECD) published its 2022 Report on the peer review of the automatic exchange of financial information in various jurisdictions.

Amendments to Order No. 24 of the Ministry of Labour and Social Development of 26 January 2022 "Concerning the Conduct of Routine Monitoring for the Purposes of Supporting Employment" entered into force from 1 January 2023.

The operator of the digital product marking system is preparing to introduce new features to the digital marking system that will give businesses access to full and exhaustive information on any logged irregularities in the circulation of products.

The Governmental Commission for the Monitoring of Foreign Investments in the Russian Federation issued Minutes, in which it officially set out the conditions that affect decisions regarding the approval of transactions involving shares/interests held by persons from "unfriendly" countries and the payment of dividends to such persons.

The Moscow Arbitration Court upheld claims brought by an importer in case for the invalidation of a customs authority’s decisions to include amounts of VAT on royalties in the customs value of imported goods.

On 28 November 2022, the EU Council unanimously adopted a decision to add violations of EU sanctions to the list of EU crimes.

The Volga District Arbitration Court upheld a customs authority’s claim for customs charges to be collected by levying execution on goods owned by the Russian final buyer (not the importer).

We discuss the recent letter issued by the Ministry of Finance of Russia regarding a taxpayer’s request for the initiation of a mutual agreement procedure on transfer pricing between the governments of Russia and South Korea.

Edict No. 520 of 5 August 2022 imposed a ban on transactions involving shares and equity interests in strategic enterprises, certain fuel and energy companies and related service companies.

There is now a whole range of presidential edicts and directives imposing various prohibitions and restrictions on transactions involving shares and equity interests in financial organisations.

Decree No. 22 of the Chief Sanitary Officer of the Russian Federation cancels the PCR testing requirement for Russian and foreign citizens.

On 19 September 2022, the Ninth Arbitration Appeal Court upheld the trial court ruling on case No. A40−82 219/2022, in which the decisions of a customs authority were found to be lawful.

Presidential Edict No. 737, adopted on October 15, and the clarifications of Edict No. 618, issued on October 13 establish a new framework for transactions with companies linked to persons from "unfriendly" countries.

The Federal Tax Service has published a "Review of Case Law on the Establishment of a Taxpayer’s Actual Tax Obligations" (Federal Tax Service Letter No. BV-4−7/13 450@ of 10 October 2022).

The Arbitration Court of the Krasnodar Region ruled as unlawful a customs authority’s decisions to require royalties for software products to be included in the customs value of imported goods.

On 27 September 2022 the State Duma adopted amendments to the Labour Code designed to regulate the status and rights of mobilised employees.

On 16 September, Swiss regulators announced that the exchange of tax information with Russia would be suspended.

On 9 September 2022 the Council of the European Union adopted Decision on the suspension of the Visa Facilitation Agreement with Russia.

Edict No. 618 eliminates the last major unregulated category of transactions involving parties from "unfriendly" countries: transactions with LLC interests.

The Federal Customs Service presents guidance on the application of import duty rates set by Government Decree No. 788 of 6 July 2018.

Edict No. 585 of the President of the Russian Federation “Concerning Temporary Measures to Regulate the Legal Status of Citizens of the Donetsk People’s Republic, the Lugansk People’s Republic and Ukraine in the Russian Federation” was published on 27 August 2022.

The Russian Government published Decree No. 1352 concerning Grant Support for Talented Foreign Citizens and Stateless Persons Studying at Russian Organisations.

The State Duma was presented with a draft law concerning an amendment to the Federal Law "Concerning Citizenship of the Russian Federation" to simplify the conferment of Russian citizenship on foreign citizens.

Arbitration Court adopted a ruling involving a dispute over whether royalties for the use of a trademark and VAT paid on those royalties by the importer as a tax agent should be included in the customs value of imported goods.

The Arbitration Court adopted a ruling on a dispute over whether royalties for the right to use trademarks in business activities and amounts of VAT on royalties paid by an importer as a tax agent should be included in the customs value of imported goods.

The President of Russia signed an edict on special economic measures in the financial and fuel and energy sectors in connection with unfriendly actions of certain foreign states and international organisations.

All Internet advertising directed at Russian users will have to be marked and subsequently recorded in a special system known as the Unified Register of Internet Advertising.

The Ninth Arbitration Appeal Court adopted a ruling on case, which concerned a dispute over whether amounts of royalties for the right to use trademarks, processes and know-how should be included in the customs value of imported goods.

The payments will be subject to PIT at the rates of 13% (15%) for residents and 30% for non-residents.

Federal Law No. 357-FZ concerning Amendments to the Federal Law "Concerning the Legal Status of Foreign Citizens in the Russian Federation" was published on 14 July.

Federal Law No. 193-FZ extends the range of holders of exclusive rights in a trademark and establishes mandatory registration of a pledge of exclusive rights in a registered computer programme or database.

Decree No. 1267 of the Russian Government "On the Annulment of Certain Acts and Certain Provisions of Acts of the Government of the Russian Federation" came into force.

Federal Law No. 324-FZ, passed on 14 July, establishes special provisions regarding the VAT, profits tax and personal income tax treatment of transactions involving digital financial assets.

On 5 July the State Duma passed in the first reading draft law setting out a range of amendments to the Federal Law "On Information, Information Technology and Information Protection".

On 11 July 2022 the President of the Russian Federation signed into force Edict No. 440 of 11 July 2022 and Edict No. of 29 April 2019.

The FTS published Order, which approves the list of countries with whose tax authorities the FTS automatically exchanges country-by-country reports on an annual basis.

We comment on the application of transfer pricing rules for intragroup financial transactions in the current economic environment.

On 5 July 2022 the State Duma passed in the third reading a bill proposing a number of amendments to Part Two of the Russian Tax Code.

The Federal Law simplifies the rules for obtaining immigration documents for foreign citizens who are specialists in the field of information technology.

We comment on the latest letters from the Federal Tax Service regarding transfer pricing regulations for cross-border transactions.

In June the Russian authorities eased or eliminated most foreign exchange restrictions that had applied to residents since late February.

On 22 June 2022, the Federation Council approved bill, which makes amendments to the Law of the Russian Federation "Concerning the Subsurface".

On 16 June the Russian Government Regulation No.1552-r was published, which removes a number of restrictions on the entry of foreign citizens into Russia.

The draft Law on Amendments to Articles 8 and 13.2 of the Federal Law “Concerning the Legal Status of Foreign Citizens in Russia” has been passed in the first reading.

The Arbitration Court adopted a ruling over the legality of decisions regarding the inclusion of software royalties in the customs value of imported goods.

Russia is to lift pandemic-related restrictions on foreigners entering the country by air and sea with effect from 14 June 2022.

Temporary procedure for the fulfilment of monetary obligations by Russia, constituent entities, municipalities and residents has been introduced.

The Government of the Russian Federation has issued Directive which removes restrictions to enter the Russia for some categories of foreign citizens.