Russian Duma ratifies suspension of some provisions of tax agreements with 38 countries

MOSCOW. Dec 12 (Interfax) - The Russian State Duma has ratified the suspension of a number of provisions of tax agreements with certain foreign countries.

The president had signed a relevant executive order on August 8, which took effect on the day of its publication. However, to observe the necessary legal procedures, it had to be ratified by the Duma.

The government submitted the document to the Duma in early November.

"The federal bill suspends virtually all provisions relating to the agreement as to what state income shall be taxed in, as well as the application of reduced rates, benefits, and exemptions with 38 states," the Duma's Foreign Affairs Committee said in its official opinion on the bill.

"It also suspends the rules of the taxation of dividends, interest, income from real estate, income from the sale of movable and immovable property, income from copyrights and licenses, income from paid employment and professional fees, pensions, and other income," it said.

"At the same time, the provisions on the avoidance of double taxation shall remain in effect. Income shall still be taxed in only one of the states. i.e. either in the state of the income recipient's tax residence or in the source of payment state. [The bill] also retains the privileges of diplomatic employees and the opportunity for exchanging information between tax authorities concerning taxpayers, income received, and taxes paid to prevent tax evasion. In addition, the amendments will not affect mutual agreement procedures, and therefore, tax authorities will be able to consult each other and decide together in which state income shall be taxed," it said.

During the Duma plenary session on Tuesday, parliamentarians asked a Finance Ministry official why they were asked to ratify the suspension of certain provisions of tax agreements rather than their termination. "As concerns termination, then a bill would have to be passed on each of the agreements. Now this bill is aimed at enforcing the [presidential] decree, and so we have a suspension here," Deputy Finance Minister Alexei Sazanov said.

As reported, the president ordered on August 8 that certain provisions of tax agreements that Russia earlier concluded with a number of countries be suspended. The order applied to Poland, the United States, the Republic of Korea, Bulgaria, Sweden, Luxembourg, Romania, the United Kingdom, Hungary, Ireland, Slovakia, Albania, Belgium, Slovenia, Croatia, Canada, Yugoslavia, Switzerland, the Czech Republic, Denmark, Norway, Italy, Finland, Germany, France, Macedonia, Cyprus, Spain, Lithuania, Iceland, Austria, Portugal, Greece, New Zealand, Australia, Singapore, Malta, and Japan

Sazanov said at the time that the suspension of the agreements would not apply to provisions allowing for crediting for tax, including personal income tax.