5.1. Measures against the Abuse of International Tax Treaties. Practical Aspect: Approaches of Federal Tax Service of Russia and International Practices
Track: 5. Investments / Finance
Practice shows that many transnational companies use double taxation avoidance agreements not just as an instrument to decide where to pay the income tax, but as a loophole not to pay taxes at all. Violation of rules of double taxation avoidance leads to the issue of double non-taxation, when the income is not taxed in any country. Improper use of provisions of intergovernmental treaties by individual companies also allows them to artificially transfer profits to low-tax jurisdictions from the country where the economic activity actually takes place.
OECD has proposed an action plan to counter aggressive tax planning, such as combating abuse of international double taxation avoidance agreements, fighting artificial avoidance of permanent establishment status, strengthening control over interest deduction and other financial transactions.
In line with global trends, Russia is taking measures to counter aggressive tax planning and to deoffshorize the economy as a whole. These include prevention of the use of offshores for avoiding taxation of income from activities in Russia; “thin capitalization” rules limiting processing of interest from lending agreements that actually constitute dividend yield; limitation of benefits under international agreements of transit financial transactions.
Regarding these issues, the Federal Tax Service has developed certain approaches in law enforcement, which are offered for presentation and discussion at the round table.
Below are just a few issues that are going to be discussed:
- Restriction of income withdrawal from taxation through shifting the profit centre. Thin capitalization rules. The actual income earner concept;
- Prevention of artificial avoidance of taxation using the permanent establishment status;
- Measures of countering the use of international agreements' conflicts to achieve double non-taxation;
- Russian and international experience in preventing the provision of benefits under an agreement in case of non-compliance; examples of judicial practice.
Panellists will discuss national legislation specificities, judicial practice and practical experience in these issues.
Participants include leading experts of Russian and international law firms and international organizations. Agenda includes not only approaches of the Federal Tax Service, but also law enforcement practice of Great Britain, Canada, the Netherlands, Italy, Australia and other countries.
Law enforcement approaches are taken into account by both tax authorities in conducting audits and taxpayers in planning their tax behaviour in order to avoid tax claims in the future. Therefore, this topic will be relevant to lawyers, consultants and representatives of Russian and international companies. Through development of common approaches and understanding of global trends, the business can reduce tax risks while planning its activities and minimize the number of disputes in the future.
In particular, this panel will cover the following topics:
- Existing understanding of the abuse of international tax treaties; Russian experience of preventing the granting of treaty benefits and examples of litigation;
- Offshore compliance;
- Special rules of “thin capitalization”, the concept of the beneficial owner;
- Preventing the artificial avoidance of permanent establishment status;
- Precautions against the using mismatch arrangements to achieve double non-taxation;
- International special anti-abuse rules and practices.
Deputy Head, Federal Tax Service of the Russian Federation
Born on February 3, 1975.
Education, academic degree:
In 1996 graduated from Moscow State Law Academy. Ph.D. in Economics.
Works in tax authorities since July 1996. Acted as a deputy of various officers, from 1st category legal counsel of the Moscow State Tax Inspectorate to Head of Inter-District Inspectorate of the Moscow Federal Tax Service No 47.
In September 2010 was appointed Head of Federal Tax Service's Legal Office.
In December 27, 2010 was appointed Deputy Head of Federal Tax Service by the executive order of the Russian Federation Ministry of Finance dd. 27.12.2010 No 1557.
Class 3 Active State Advisor of the Russian Federation by the Decree of the RF President dd. 14.03.2012 No 303 "On the Appointment of the Russian Federation State Civil Service Class Ranks to Federal Civil Servants".
Coordinates and controls the following activities:
– Legal Administration;
– Administration for Pre-Trial Fiscal Disputes Settlement;
– Administration for Taxpayer Registration and Accounting.
Coordinates legal activities across tax authorities, ensures coordinated position of tax authorities in courts, ensures the conformity of regulatory acts issued by Federal Tax Service to the RF legislation.
Coordinates the examination of fiscal disputes between Russian tax authorities and taxpayers.
Associate, Maisto e Associati
Member of the Association of Professional Accountants. Holds a foreign relations degree from Leiden University; specializes in transfer pricing services, international tax management and corporate law. Published a number of articles on OECD comments and international taxation.
Managing Partner, Cadesky Tax
Managing partner, Cadesky Tax;
In full-time income tax practice since 1980;
Founder and chairperson, International Tax Specialist Group (ITSG);
Advisor on tax policy to Canadian Government;
Vice president, Society of Trust and Estate Practitioners (STEP Worldwide);
Vice chairperson, CPA Canada Tax Committee for Small and Medium-Sized Enterprises;
Author of numerous papers on Canadian and international taxation, lecturer and media commentator on tax issues;
Editor-in-chief of the publication Taxation of Real Estate in Canada (Carswell); co-author of the books Trusts and International Tax Treaties (Tottel), Taxation at Death (Carswell), Towards Greater Fairness in Taxation, A Model Taxpayer Charter (IBFD).
Deputy Head, Federal Tax Service of the Russian Federation
Deputy Commissioner of Federal Tax Service of the Russian Federation
Сlass 2 Active State Advisor of the Russian Federation
Daniil Egorov was born in 1975 in Moscow.
1998: graduated from Peoples’ Friendship University of Russia with specialization in Legal Studies.
2000–2001: commission member of the Inter-Regional Bar for Entrepreneurs and Citizens Assistance.
2001: legal advisor, legal manager of ZAO Eneco.
2001–2003: 1st category specialist, consultant of Executive Support Department, Moscow Directorate, Ministry of Taxes and Assessments.
2003–2005: head of Information Support, Electronic Data Input and Desk Audit Department, then head of Desk Audit Department, Moscow Inter-District Inspectorate No 44, Ministry of Taxes and Assessments.
2005–2009: head of Desk Audit Department and Field Audit Department No 2, Moscow Inter-District Inspectorate No 50, Federal Tax Service.
2009–2010: deputy head of Examination Department, Moscow Directorate, Federal Tax Service.
2010–May 2011: deputy head of Private Litigation Examination Department, Largest Taxpayer Litigation Examination Department, deputy head of Directorate and head of Pre-Trial Audit Directorate, Federal Tax Service.
Coordinates and controls the following activities:
- Control Directorate
- Transfer Pricing Directorate
- Desk Audit Directorate
- Operative Control Directorate
Mr Egorov supervises the following areas:
- Organization of enforcement control and monitoring of Russian tax and assessment laws and regulations; tax and assessments calculation control following the tax checks.
- Methodological coordination of examination, monitoring, integration and analysis of tax check results.
- Coordination of analysis and systematization of the means of tax evasion identified following the tax checks.
- Ensuring cooperation of tax authorities with law enforcement and other governing bodies in identification, prevention and suppression of tax offences.
- Coordination of the work of tax authorities on till equipment registration, organization and methodological support of monitoring of compliance by organizations and individual entrepreneurs with legal requirements on the use of till equipment in cash and/or plastic card transactions and on fullness of respective cash proceedings.
- Coordination of the work of tax authorities in control and monitoring of national private and promotional lotteries, as well as the intended use of lottery proceeds.
- Coordination of national lottery permitting.
- Coordination of the issue of marking labels for tobacco and tobacco products made in Russia.
- Coordination of licensing of fraud-resistant printing products, including securities blanks, and trade of such products; reissue of the documents confirming the licenses; suspension, revalidation and cancellation of licenses.
- Coordination of gambling licensing of betting shops and betting terminals; reissue of the documents confirming the licenses; cancellation of licenses.
- Coordination of technical verification of gambling equipment.
- Coordination of tax control during tax checks of major taxpayers.
- Coordination of foreign currency transactions by residents and non-residents, other than lending institutions or forex exchanges.
- Organization of enforcement control and monitoring of Russian tax and assessment laws and regulations, as well as regulatory acts adopted following the tax checks, including regarding income tax returns.
- Interaction with authorities, institutions, organizations and public officials regarding the provision of data to tax authorities from:
- Pension Fund of the Russian Federation;
- Social Insurance Fund of the Russian Federation.
- Coordination of methodological and organizational support of Federal Tax Service and local tax authorities regarding tax administration of prices and transfer pricing for the purposes of taxation and tax risk identification.
- Coordination of the work of Federal Tax Service and local tax authorities regarding the analysis and evaluation of market processes and pricing on external and internal Russian markets of goods (operations, services), mechanisms and tax consequences of transfer pricing for the purposes of taxation and tax risk identification.
- Coordination of development of recommendations regarding tax legislation improvement, as well as improvement and automation of the forms and methods to ensure that deal prices correspond to market prices (economic feasibility).
- Coordination and control of the work of Control Directorate, Desk Audit Directorate and Transfer Pricing Directorate.
- Coordination of the work of Inter-District Desk Audit Inspectorate of the Federal Tax Service, Inter-District Major Taxpayer Inspectorate of the Federal Tax Service Nos 3 and 9.
- Coordination of the work of Inter-District Taxation Pricing Inspectorate of the Federal Tax Service.
- Coordination of the work of local tax authorities in Southern Federal Okrug, organization of its cooperation with the office of the plenipotentiary representative of the president of the Russian Federation in Southern Federal Okrug and with local authorities in Southern Federal Okrug.
Senior Partner, Association of attorneys Forward Legal
Senior Partner at Forward Legal; member of International Tax Specialist Group; allied member of Outer Temple Chambers; author and co-author of publications on litigation, tax law and business restructuring in Russian and international legal and business media; speaker at numerous training courses, conferences and panels.
In 1990, he graduated cum laude from the Moscow State University.
In 1998, joined the PwC network and became a partner in 2008. Specializes in taxation services. Mr Kolchin is the head of taxation management methodology group at PricewaterhouseCoopers Consulting, LLC.
Member of Supervisory Board, International Tax Specialist Group
- Started his career and spent many years working in the Inland Revenue Department of Hong Kong Government, specializing in tax disputes resolution, tax litigations, tax investigations and prosecutions of offences under the Inland Revenue Ordinance (IRO), last position as senior assessor (1976 to 1993)
- Partner and Head of Tax, Trust and Corporate Advisory Services of a Hong Kong CPA firm belonging to a second tier international accountancy network (1998 - 2002)
- Since 2003 serve as Chairman and Managing Director of a professional consulting group comprising of international tax and trust advisory, corporate services, consulting and accounting firms, with over 50 professional and supporting staff, and offices in Hong Kong, Macau and Shenzhen, China
- Specialist in international and cross border taxation, wealth succession planning, civil tax litigations, pre-IPO and corporate finance related structuring and advisory work involving China, Hong Kong and overseas operations, and served as independent tax advisor and provided tax opinions on Hong Kong and China tax issues regularly for companies having submitted applications to the Hong Kong Stock Exchange for public listing of shares
- Past president of the Taxation Institute of Hong Kong (www.tihk.org.hk) (1999 to 2002)
- Formerly Representative of Taxation Institute of Hong Kong at Joint Liaison Committee of Taxation of Hong Kong, a committee which the Hong Kong Government consults to on tax policies and practices
- Executive Committee member of Hong Kong Branch of Society of Trust & Estate Practitioners (UK)
- Immediate past president and honorary advisor of Asia-Oceania Tax Consultants' Association (www.aotca.org), an umbrella association of tax professionals practicing in 16 tax jurisdictions in Asia and Oceania
- Founding member and Steering Committee member of International Tax Specialists Group (www.itsgnetwork.com)
- Served as Chief Executive Officer, Executive Director, Non-Executive Director, Independent Non-Executive Director and Chairman of Audit Committee of several companies listed on Hong Kong Stock Exchange
- Regular speaker on issues relating to tax and public finance in professional and international conferences
- FCPA (practicing), Hong Kong Institute of Certified Public Accountants
- Fellow, Association of Chartered Certified Accountants (UK)
- Member, Chartered Institute of Secretaries and Administrators (UK)
- Member, The Hong Kong Institute of Chartered Secretaries
- Fellow, Taxation Institute of Hong Kong
- Fellow, The Hong Kong Institute of Directors
- Barrister, Lincoln's Inn, UK
- Member, STEP (UK)
- Member, Macao Society of Certified Practicing Accountants
- Certified Tax Adviser, Hong Kong
- Higher Diploma in Accountancy, Hong Kong Polytechnic University
- Bachelor of Laws, University of London, UK
- Master of Laws, University of London, UK
· He is the Partner leading Ernst & Young's International Tax Services Group (‘ITS’) for the UK and Ireland. ITS provides tax consultancy services to a wide range of UK and foreign-based multinational companies
· He has over 20 years’ experience advising clients on international tax matters
· He advises on a wide range of strategies to manage international taxes. He works across all industries focussing mainly on UK and US headquartered multinationals. His clients include or have included Diageo plc, Barclays plc, Marathon Oil Inc, SAB Miller plc, Time Warner Inc, Cadbury plc, Alliance Boots plc and Reckitt Benckiser plc
· He is co-author of the Ernst & Young Double Tax Relief handbook and Tolleys guide to the UK/US double taxation agreement. He is a leading authority on the UK controlled foreign company laws. He has negotiated groundbreaking clearances and rulings with the UK fiscal authority including (in the public transaction arena) for the first US to UK "inversion" transaction when Ensco Inc redomiciled to the UK in 2009
· His clients include both inbound and outbound companies across all industries and predominantly in the FTSE 100/Fortune 500
· His clients include or have included Diageo, Barclays, Marathon Oil, SAB Miller, Alliance Boots and Reckitt Benckiser
· He has a special interest in the oil services sector. He led the first inversion of a US corporation to the UK on behalf of Ensco Plc (the global driller). He has also advised Subsea 7, Acergy, Global Santa Fe, Diamond Offshore Drilling and CHC Helicopters on major international tax projects
Barrister, Outer Temple Chambers
David Russell is a barrister and a Queen's Counsel. He was the president of the Taxation Institute of Australia from 1993 to 1995, and of the Asia Oceania Tax Consultants’ Association from 1996 to 2000. He has lectured at the University of Sydney for the Master of Taxation course and the University of Queensland for the Master of Laws course. For many years, he has been the chairman of STEP Australia; he currently is a member of the STEP World Wide Council and various STEP Committees, including the Tax Committee. Mr Russell is a Academician of International Academy of Estate and Trust Law, an honorary member of the Taxation Institute of Hong Kong, a member of the Middle East and North Africa Branch Committee of the Chartered Institute of Taxation (UK), a member of the board of the International Tax Specialist Group. In 2012 he was appointed a member of the Order of Australia for “service ... to taxation law and legal education.” In 2014 he became the Tax Institute’s Chartered Tax Adviser of the Year. Mr Russell is an author of numerous publications on taxes and international taxation.
Partner, Loyens & Loeff
Tax partner, heads up Loyens & Loeff's CEE team and Russia/CIS team. He specialises in pan-European tax structuring of investments with a particular focus on Central and Eastern Europe and Russia/CIS. He has in-depth knowledge of tax planning involving the Netherlands and Luxembourg vis-a-vis Central and Eastern Europe, Malta and Cyprus as well as Russia and the CIS countries. He worked in the Tokyo office between 1995 and 1998.
He is chairman of the International Tax Affairs committee and the Dutch Investment Climate team of the Dutch Tax Lawyers Association (NOB). He is a frequently asked lecturer and writer on international tax planning, particularly in relation to structuring investments in and from Central and Eastern Europe and Russia/CIS.
*This schedule may be subject to change