Companies cooperating with foreign organizations and paying them income for certain types of income must report to the FTS by submitting a special tax calculation.
The suspension of DTA with unfriendly countries, amendments to Chapter 25 of the Russian Tax Code, and the change in the form of such a tax calculation at the beginning of this year have raised a lot of questions from organizations.
We still receive inquiries from clients asking whether it is necessary to include all income paid to foreign organizations in the calculation. As we have noticed, many accountants have the impression that it is necessary, as the new form includes two additional sections for reflecting amounts not subject to taxation.
In May, the FTS of Russia finally issued clarifications on this issue, stating that despite changes in the form, the current position remains that income from foreign organizations for work performed and services rendered outside the territory of the Russian Federation may not be included in the calculation (FTS Letter No. SD-4-3/4421@ dated 12.04.2022). Such income is not considered income from a source in Russia, whereas the calculation is intended only to reflect income from sources in Russia.
The new FTS letter also presents criteria for determining the place of work and services with examples. In particular, information, audit, and consulting services provided remotely by foreign contractors are considered to be provided outside Russia. Therefore, remuneration for these services does not need to be included in the tax calculation.
However, it is necessary to consider one more point mentioned in the FTS letter. All the above does not apply when the service is provided by an affiliated foreign entity.
Currently, income from such services is considered income from a source in Russia according to amendments effective from the beginning of this year. The provisions of the DTA are taken into account. Since the DTA with unfriendly countries is suspended, if the affiliated entity is located in one of these countries, the income of this entity must be taxed and included in the tax calculation.
Your application has been successfully accepted.
We will contact you shortly.
We have sent an email to your email, please confirm your subscription by clicking on the link in the email.
