Information for MNE groups on the BEPS 13 requirements applicable in Russia

The deadline for the submission of Notifications on Participation in a MNE group, as required under the Tax Code of the Russian Federation, is drawing near.  If the financial year of the parent company of the MNE group corresponds with the calendar year, then the Notification on Participation in an MNE group must be submitted to the tax authorities of the Russian Federation no later than 31 August 2020.  If the financial year of the parent company does not correspond to the calendar year, then Russian companies that are participants in MNE groups must submit the Notification within eight months of the end of the financial year.

The following are rrecognised as participants in the MNE group:

1. Companies included in the consolidated financial statements of an MNE group, or companies that would be included in the consolidated financial statements if the shares of that company were traded on the securities market;
2. Companies excluded from the consolidated financial statements based solely on size or materiality grounds;
3. The permanent establishments of companies indicated in points 1 and 2

Format

Contrary to the requirements of other jurisdictions, in the Russian Federation the notification is filed electronically, but in a specially designed form in XML format in Russian, in accordance with Order No. MMP-7-17/124@ of the Federal Tax Service of Russia, dated 6 March 2018.

Fine – 50,000 (for failure to file the Notification by the established deadline or for filing a Notification containing inaccurate information) from 2020 reporting period.

What does this mean for you?

1. We recommend determining whether a group, which includes a Russian company, is an MNE group;
2. We recommend verifying if the company is included on the list of strategic enterprises as recorded in the legislation of the Russian Federation, and if so, obtaining consent to submit the data
3. We recommend preparing and filing the Notification on Participation in an MNE group in accordance with the requirements of the RF Tax Code.

For MNE groups with a Russian parent company

• We recommend preparing and filing a Country Report with the tax authorities;
•  We recommend preparing a Master file and Local file.

For MNE groups with a Russian UPE

• We recommend clarifying the automatic exchange agreement between the jurisdiction of filing of the Country Report and that of the Russian Federation;
•  If there is no automatic exchange agreement, we recommend requesting a Country Report from the parent company of the MNE Group and adapting it in accordance with the requirements of Russian law;
•  We recommend requesting the Master file from the parent company of the MNE group and adapting it to the requirements of Russian law;
•  We recommend requesting the Local file from the parent company of the MNE group (if it is prepared at the global level) and adapting it to the requirements of Russian law, or preparing it independently.

The Notification on Participation in an MNE group must be submitted in XML format according to specially developed schemes.

We are pleased to be able to present to you the opportunity to automate the process for preparing and filing your Notification on Participation in an MNE group and Country Report using the KPMG BEPS Automation Tool.

Our application is a boxed solution that provides the following features:

• systematises data into a single download format
• delineates the group perimeter and identifies possibilities to make changes in each reporting period
• generates a Notification on Participation in an MNE group in accordance with the legislation of the Russian Federation: an XML format for sending to the tax authorities, and an EXCEL format for verification
• it is a unified and streamlined process that collects and processes data within the group and takes into account the distribution of roles and areas of responsibility
• provides an XML ​​Country Report Schema for all required tax jurisdictions

Our KPMG specialists would be delighted to provide detailed answers to any questions that you may have, and to assist you with the preparation of notifications for filing with the tax authorities of the Russian Federation, including converting the Notification to XML format

Natalya Valkovskaya
Partner, Head of Transfer Pricing
KPMG in Russia and the CIS
Т: +7 495 937 44 77
Е: nvalkovskaya@kpmg.ru

Ilarion Lemetyuynen
Transfer Pricing
Partner
KPMG in Russia and the CIS
Т: +7 495 937 44 77
Е: ilemetyuynen@kpmg.ru

Olga Pletneva
Transfer Pricing
Partner
KPMG in Russia and the CIS
Т: +7 495 937 44 77
Е: opletneva@kpmg.ru

Anastasia Mikhailova
Transfer Pricing
Director
KPMG in Russia and the CIS
Т: +7 495 937 44 77
Е: anastasiamikhailova@kpmg.ru

Vera Evdokimova
Transfer Pricing
Director
KPMG in Russia and the CIS
Т: +7 495 937 44 77
Е: vevdokimova@kpmg.ru

Elena Ivannikova
Transfer Pricing
Director
KPMG in Russia and the CIS
Т: +7 495 937 44 77
Е: eivannikova@kpmg.ru