Слайд1 8 th Session of Congress, 5-6 June 2014, Yekaterinburg Taxation of immovable assets in Cross-border transactions and issues of tax evasion Reporter: Vinnik Alexey Department of Finance Law USLA

Слайд2 Real Estate Taxation of Enterprises Changes in process and in method of tax base’s calculation before after For Russian company: Average annual value (Depreciable value) Cadastral value For foreign company with permanent representative office: Average annual value (Depreciable value) Cadastral value For foreign company without RO: For foreign company without RO: Inventory value Cadastral value

Слайд3 Real Estate Taxation of Enterprises The powers of adjustment of tax base’s calculation vested in the legislative authorities of territorial subjects of the Russian Federation have been enlarged (article 12 IRC RF) Application of cadastral value as the tax base (article IRC RF): 1. Governmental cadastral appraisal of real estate properties in a territorial subject of the RF; 2. Confirmation of the results of the governmental cadastral appraisal of real estate properties in a territorial subject of the RF; 3.Approval by the executive authority of a territorial subject of the RF of the list of properties which tax bases determine as cadastral value.

Слайд4 Foreign company with permanent representative office Existence of office Office cadastral value depreciable value Territorial Subject № 1 Conditions are fulfilled Territorial Subject № 2 Conditions are not fulfilled

Слайд5 Foreign company without permanent representative office (agency) owns an office owns an office cadastral value tax base - 0 Territorial Subject № 1 Conditions are fulfilled Territorial Subject № 2 Conditions are not fulfilled

Слайд6 National law from № 52-ФЗ «About the Changes in Parts One and Two of IRC RF» Foreign company with permanent representative office (Single tax on imputed income) pay a tax according the cadastral value exempt from taxes Territorial Subject № 1 Conditions are fulfilled Territorial Subject № 2 Conditions are not fulfilled

Слайд7 foreign company ownership Russian company/ foreign company without RO property is located in the Russian Federation Public finance Finance lease Example № 1 finance lease contract is on the lessor's balance sheet recognized by the taxpayer by the taxpayer (article 374 TC RF) (article 374 TC RF)

Слайд8 foreign company ownership Russian company/ foreign company without RO property is located in the Russian Federation Public finance Finance lease Example № 2 finance lease contract is on the lessee's balance sheet recognized recognized by the taxpayer by the taxpayer (article 374 TC RF) (article 374 TC RF)

Слайд9 Conditions are not fulfilled ( article TC RF ) Finance lease Example № 2 Russian company company property is located property is located in the RF in the RF finance lease contract with foreign company tax base – 0 depreciable value

Слайд10 no cadastral value Finance lease Example № 2 Russian Russian company company property is located property is located in the RF in the RF finance lease contract with foreign company foreign company tax base – 0 depreciable value

Слайд11 Arbitration case № А /2012 Parties: Complainant: Krasnoyarsk city administration Respondent: Adjudication board which reviews disputes about the results of cadastral valuation in Krasnoyarsk region Essence of the dispute: Krasnoyarsk city administration filed a lawsuit in court seeking a declaration of illegal decisions of the Adjudication board which reviews disputes about the results of cadastral valuation of land property. Result: Supreme Arbitration Court of the Russian Federation recalled the judgments of inferior courts which had abjudicated the Complainant and remanded. Inferior Courts arrived at the conclusion that the Administration did not have economic interests. The Administration did not prove the abuse of law by the Adjudication board.

Слайд12 Thank you for your attention Vinnik Alexey Department of Finance Law USLA