Russia Signs OECD Agreement on Common Reporting Standard

The Tax Management Transfer Pricing Report ™ provides news and analysis on U.S. and international governments’ tax policies regarding intercompany transfer pricing. 

May 18 — Russia agreed to automatically share financial account information but passed up an opportunity the same day on a similar agreement to exchange company country-by-country reports.

Russia signed the OECD's common reporting standard (CRS) multilateral competent authority agreement May 12 at a meeting of tax administration heads in Beijing, but likely held off on the second pact until its own country-by-country legislation is approved, Vladimir Starkov, vice president at Chicago-based NERA Economic Consulting, told Bloomberg BNA in an e-mail May 12.

Russia is in the early stages of developing domestic country-by-country reporting legislation, publishing a draft online April, and asking for comments on it by June 22. If passed by the legislature, it would require country-by-country reporting by multinational companies whose consolidated revenue in the financial year before the reporting year was at least $768 million.

If adopted, the bill would come into effect on Jan. 1, 2017, with a transitional period between 2017 and 2019.

Russia would still be able to exchange country-by-country reporting through its bilateral agreements even if it chooses not to join the multilateral agreement, Pascal Saint-Amans, director of the OECD's Center for Tax Policy and Administration, told Bloomberg BNA May 18. He said further signing ceremonies will be coming Russia's way as countries adopt recommendations to impose reporting on large companies under Action 13 of the project to combat tax erosion and profit shifting.

So far, 39 countries have signed the agreement, with six—Canada, Iceland, India, Israel, New Zealand and China—signing May 12 in Beijing.

Common Reporting Standard

At the Beijing meeting, Russia became the 81st jurisdiction to join the CRS agreement, under which Russian tax authorities automatically will receive information about foreign accounts of Russian tax residents from foreign tax authorities.

Starkov said the agreement allows Russia to better enforce its law that obligates Russian taxpayers to disclose holdings of assets in foreign jurisdictions.

Viktor Machekhin, head of tax practice at Linklaters CIS in Moscow, agreed, saying joining the CRS allows Russia's tax authorities to receive information that other nations would possess. “Some of the companies that have a presence abroad will still have to disclose their information if they are active in the countries where such disclosure is provided,” Machekhin told Bloomberg BNA May 17. “Therefore, there are certain benefits in having one's own national rules” that require companies to disclose tax and financial accounts information.

For Russia, the first exchanges of financial information are expected to take place in 2018 for information covering 2017, and are to be conducted electronically via the OECD platform. The data will detail the types of investment income, including dividends, interest, income from some insurance products, proceeds from the sale of financial assets, the account balance and payments made via the account. Russia will send similar information about foreign tax residents to relevant countries.

To contact the reporter on this story: Natalia Suvorova in Moscow at correspondents@bna.com

To contact the editor on this story: Molly Moses at mmoses@bna.com

For More Information

The complete list of signatories to the MCAA as of May 12, 2016, is at http://src.bna.com/e6R.