On 30 November 2016, Federal Law No. 401-FZ, amending the Russian Tax Code, took effect (certain provisions take effect on different dates).
Among other changes, the following particular changes were introduced in regard to completion of the duty to pay taxes, levies, insurance contributions, fines and penalties (hereinafter referred to as “tax payments”):
1. Tax payments may be made by a third party (hereinafter meaning an individual or a legal entity), other than the taxpayer, acting on behalf of the taxpayer. However, this party shall not be entitled to have any refunds remitted to them on behalf of the taxpayer from the budgetary system of the Russian Federation.
2. Where tax payments are made by a party other than the taxpayer, the payment procedure shall be subject to the same general requirements as taxes paid by the taxpayer on his/her own. Thus, the duty to pay tax that lies with the third party acting on behalf of the taxpayer shall be deemed discharged upon receipt by the bank of payment order to transfer cash funds from the third party’s bank account, provided that there are sufficient funds in that account as of the date of payment. Revocation of this payment order or the bank’s return of payment order as unperformable shall result in a recognised failure to make tax payments by the party acting on behalf of the taxpayer.
3. To ensure the correct allocation of tax payments made by any other party on behalf of a taxpayer, rules providing the necessary payment instructions on how to transfer cash funds to the budgetary system of the Russian Federation were drawn up.
4. The amended law provides that unsettled tax dues that have gone to litigation for recovery and overdue longer than three months can be recovered by debiting the relevant monies from the accounts of the third party recognised as related party to the defaulting taxpayer in amounts that have been credited to the third party’s accounts by the defaulting taxpayer.
5. Tax, levy, insurance contribution, fine and penalty amounts paid in accordance with the Russian Tax Code by any individual other than the taxpayer shall not be recognised as forming part of the taxpayer’s income. However, similar payments made to the account of any legal entity or individual entrepreneur shall be treated as a taxpayer’s taxable income.
The above amendments will, among others, facilitate the payment of taxes, fines and penalties on behalf of foreign taxpayers and Russian residents who are absent from Russia and/or have no valid accounts for rouble payments as of the date on which their personal income tax should be paid for the reporting period, and also reduce outstanding tax, fine and penalty amounts.