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Maxim Kalinin

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Maxim Kalinin serves as managing partner of Baker & McKenzie’s St. Petersburg office and head of the Mergers & Acquisitions, Corporate, Real Estate & Construction and Employment practice groups. He was named a European legal expert in Russia by European Legal Experts 2008, and was recognized by Chambers Europe "for his expertise in M&A and real estate work". He is also cited by Legal 500, Who’s Who Legal 2009, The International Who’s Who of Real Estate Lawyers 2008 and the Private Equity Handbook 2007/2008 for his corporate and real estate work

The Russian Federal Tax Service (the “FTS”) has issued a letter clarifying the provisions of Article 54.1 of the Russian Tax Code on tax avoidance, outlining a methodology for tax inspectorates on how to identify misrepresentations of business operations, check material facts and intent to use sham or “fly-by-night” companies. It also provides taxpayers with criteria for counterparty due diligence, which should eliminate the possibility of their subsequent tax liability.

In addition, the FTS has finally admitted the need for so-called “full tax reconstruction” (a comprehensive reclassification of transactions previously applied only by the courts) and the ability to deduct actual expenses for corporate profits tax purposes and to offset input VAT on transactions with sham companies. However, this is possible only if a taxpayer discloses the actual suppliers and financial terms in such transactions.

New amendments to the Russian Tax Code1 (“Law”) will allow individuals to reduce the Russian individual income tax on profit distributions from foreign companies and unincorporated vehicles (e.g., trusts) sourced from dividends originally paid by Russian companies that are subject to Russian withholding tax (“indirect tax credit”).

The Law eliminates the existing double taxation and economically equates ownership of Russian assets via Russian and foreign companies (trusts). At the same time, the Law eliminates the 0% tax rate previously available for Russian companies on dividends received through intermediary foreign companies that are not beneficial owners of income. This will allow, for example, the application of the 15% Russian withholding tax rate on dividends paid to Cypriot and Luxembourg intermediary companies under the recently amended tax treaties. Some historic holding structures will get a deferral; for them the new rules will apply as of 2024.

Russia’s Supreme Court confirmed that a company can be liable under Article 19.28 of the Administrative Procedure Code (“Illegal remuneration on behalf of a legal entity”) for the actions of third parties with whom that company has no formal contractual, employment, or other legal relationship.1

The court clarified that a company may be held liable if its officers either knew about such actions, or approved or instructed the respective third parties with regard to such actions. Another requirement for prosecution is that the company must have an “economic or other material interest (for example, a reputational one)” in the performance of such actions.

In light of this clarification, companies now face increased risk under Article 19.28 for the illegal actions of persons such as employees of their dealers, distributors and other counterparties.

In brief Russia has extended the validity period of migration documents expiring between 15 March and 15 June 2020. Russia eases rules for foreign employees Russia has extended the validity period of migration documents expiring between 15 March and 15 June 2020, including:1 visas, temporary residence permits, permanent residence permits;…

On 2 April 2020, a Federal law came into force with stricter punishments for violations of sanitary-epidemiological rules, with harsher fines for administrative offenses and longer prison terms for criminal offenses. On the same day, Moscow passed a city law imposing fines for violating the city’s self-isolation regime. Administrative liability…